SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
April 3, 1995
PENTAIR, INC.
(Exact name of Registrant as specified in its Charter)
MINNESOTA 0-4689 41-0907434
(State or other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) Number)
PENTAIR, INC.
1500 County Road B2 West, Suite 400
St. Paul, Minnesota 55113
(Address of Principal Executive Offices)
612-636-7920
(Registrant's Telephone Number, Including Area Code)
Not applicable
(Former name or former address, if changed since last
report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On April 3, 1995, Pentair, Inc. ( the "Registrant")
consummated the disposition of Cross Pointe Paper
Corporation ("Cross Pointe") to Noranda Forest, Inc.,
Toronto, Canada ("Noranda Forest"), pursuant to a
purchase agreement dated as of February 21, 1995 by and
among the Registrant and Noranda Forest. Cross Pointe
Paper Corporation was the Registrant's premium uncoated
text and cover and commercial printing and writing paper
manufacturing subsidiary
The purchase price was approximately $200 million,
subject to adjustment based upon an audit by Independent
Certified Public Accountants of the net book value of
Cross Pointe as of March 31, 1995. The purchase price
is payable $100 million in cash and $100 million by
promissory note payable January 1996.
Proceeds from the sale are expected to be used primarily
to reduce bank borrowings.
Item 7. Financial Statements and Exhibits.
The information supplied under this item is supplemented
by the following:
a. Not Applicable
b. Pro Forma Financial Information:
The pro forma financial information required under this
item is still being prepared. The pro forma financial
information will be filed as soon as reasonably
practicable, but no later than 60 days from the date
hereof.
c. Exhibits
(2.1) Agreement for Sale and Purchase of Stock
of Cross Pointe Paper Corporation
between Pentair, Inc. And Noranda
Forest, Inc. dated February 21, 1995
(including Exhibits and only Schedule
13). The Registrant agrees to provide a
copy of the remaining Schedules to the
Commission upon request.
(99.1) Press Release, dated February 21, 1995,
concerning the signing of the definitive
agreement to dispose of Cross Pointe
Paper Corporation.
(99.2) Press Release, dated April 3, 1995,
concerning the consummation of the
disposition of Cross Pointe Paper
Corporation.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto
duly authorized.
PENTAIR, INC
By: David D. Harrison
Senior Vice President &
Chief Financial Officer
Dated: April 17, 1995
EXHIBIT 2.1
AGREEMENT FOR SALE AND PURCHASE
OF STOCK
OF
CROSS POINTE PAPER CORPORATION
BETWEEN
PENTAIR, INC.
AND
NORANDA FOREST INC.
<PAGE>
TABLE OF CONTENTS
1. Definitions. . . . . . . . . . 1
(a) "Agreement". . . . . . . . . . 1
(b) "Arbiter". . . . . . . . . . . 1
(c) "Best Knowledge of Seller" . . 1
(d) "Business Day" . . . . . . . . 1
(e) "Buyer". . . . . . . . . . . . 2
(h) "Clayton Act". . . . . . . . . 2
(i) "Closing". . . . . . . . . . . 2
(j) "Closing Date" . . . . . . . . 2
(k) "Confidential Information" . . 2
(l) "Confidentiality Letter" . . . 2
(m) "Cross Pointe" . . . . . . . . 2
(n) "Cross Pointe Financial
Statements". . . . . . . . . . 2
(o) "Cross Pointe Group" . . . . . 2
(p) "Dayton Paper" . . . . . . . . 2
(q) "Employee Benefits". . . . . . 2
(r) "Employee Pension Benefit
Plan". . . . . . . . . . . . . 3
(s) "Environmental Conditions" . . 3
(t) "Environmental Costs". . . . . 3
(u) "Environmental Laws" . . . . . 3
(v) "ERISA". . . . . . . . . . . . 3
(w) "ERISA Affiliate". . . . . . . 3
(x) "Flambeau Lease" . . . . . . . 3
(y) "Flambeau Paper" . . . . . . . 3
(z) "Guaranteed Obligations" . . . 4
(aa) "Hazardous Material" . . . 4
(bb) "Intellectual Property". . 4
(cc) "Material Adverse Effect". 4
(dd) "Miami Paper". . . . . . . 4
(ee) "Net Book Value" . . . . . 4
(ff) "PBGC" . . . . . . . . . . 4
(gg) "Promissory Note". . . . . 4
(hh) "Purchase Price" . . . . . 4
(ii) "Purchase Price
Adjustment". . . . . . . . . . 4
(jj) "Seller" . . . . . . . . . 4
(kk) "Shares" . . . . . . . . . 4
(ll) "Statement of Net Book
Value" . . . . . . . . . . . . 5
(mm) "Tax Returns". . . . . . . 5
(nn) "Unknown Conditions" . . . 5
2. Purchase and Sale of Stock . . . 5
3. Purchase Price . . . . . . . . . 5
4. Payment. . . . . . . . . . . . . 8
5. Assumption of Liabilities. . . . 8
6. Closing. . . . . . . . . . . . . 9
7. Seller's Representations,
Warranties, and Covenants. . . . . 9
(a) Organization and Authority
of Seller. . . . . . . . . . . 9
(b) Valid and Enforceable
Agreement. . . . . . . . . . . 9
(c) Organization of Cross
Pointe Group . . . . . . . . . 10
(d) Financial Statements . . . . . 12
(e) No Material Change . . . . . . 13
(f) Leases . . . . . . . . . . . . 13
(g) Title to Personal Property . . 13
(h) Realty . . . . . . . . . . . . 13
(i) Plant and Equipment. . . . . . 14
(j) Intellectual Property. . . . . 14
(k) Employee Matters . . . . . . . 14
(l) Litigation . . . . . . . . . . 15
(m) Compliance with Laws . . . . . 15
(n) Material Contracts . . . . . . 15
(o) Licenses and Permits . . . . . 16
(p) Insurance. . . . . . . . . . . 16
(q) Employee Benefits. . . . . . . 16
(r) Transactions with Related
Parties. . . . . . . . . . . . 18
(s) Bank Accounts. . . . . . . . . 18
(t) Tax Matters. . . . . . . . . . 18
(u) Environmental, Health and
Safety Matters . . . . . . . . 20
(v) Inventory. . . . . . . . . . . 21
(w) Prospects; Outstanding
Commitments; Customers and
Suppliers. . . . . . . . . . . 21
8. Buyer's Representations and
Warranties . . . . . . . . . . . . 22
(a) Organization . . . . . . . . . 22
(b) Authority. . . . . . . . . . . 22
(c) Valid and Enforceable
Agreement. . . . . . . . . . . 22
(d) Financial Statements . . . . . 22
(e) Investment Purposes. . . . . . 23
(f) No Material Changes. . . . . . 23
9. Other Covenants. . . . . . . . 23
(a) Actions Pending Closing . . . 23
(b) Accounts Receivable. . . . . . 25
(c) Product Warranty Claims. . . . 25
10. Conditions Precedent to
Obligations of Buyer . . . . . . . 26
(a) No Material Errors;
Performance of Obligations . . 26
(b) Officer's Certificate. . . . . 26
(c) Certified Copy of
Resolutions. . . . . . . . . . 26
(d) Opinion of Seller's
Counsel. . . . . . . . . . . . 26
(e) Injunctions. . . . . . . . . . 26
(f) Clayton Act Matters. . . . . . 26
(g) Other Matters. . . . . . . . . 26
(h) No Evidence of Hazardous
Material; Licenses and
Permits. . . . . . . . . . . . 26
(i) Resignations . . . . . . . . . 27
(j) Employment Agreements. . . . . 27
11. Conditions Precedent to
Obligations of Seller. . . . . . . 27
(a) No Material Errors;
Performance of Obligations . . 27
(b) Certified Copy of
Resolutions. . . . . . . . . . 27
(c) Opinion of Buyer's Counsel . . 28
(d) Injunctions. . . . . . . . . . 28
(e) Clayton Act Matters. . . . . . 28
(f) Other Matters. . . . . . . . . 28
(g) Promissory Note. . . . . . . . 28
12. Broker. . . . . . . . . . . . . 28
13. Employees and Employee
Benefits . . . . . . . . . . . . . 28
14. Confidential Information. . . . 29
(a) Buyer's Duty . . . . . . . . . 29
(b) Seller's Duty. . . . . . . . . 29
15. Indemnification . . . . . . . . 29
(a) Seller's Indemnity . . . . . . 29
(b) Buyer's Indemnity. . . . . . . 30
(c) Notice of Claims . . . . . . . 30
(d) Limitations on Claims
Amounts. . . . . . . . . . . . 31
(e) Effect of Materiality
Qualifications.. . . . . . . . 31
(f) General Claims Procedures. . . 31
16. Lease Guarantees. . . . . . . . 32
17. Expenses. . . . . . . . . . . 32
18. Hazardous Material Indemnity . 32
(a) Indemnity. . . . . . . . . . . 32
(b) Amounts Subject to
Indemnity. . . . . . . . . . . 33
(c) Environmental Claims
Procedures . . . . . . . . . . 34
(d) Standards for
Environmental Actions. . . . . 35
(e) Changes in Environmental
Laws . . . . . . . . . . . . . 35
(f) Post-Closing
Investigations . . . . . . . . 35
(g) Emergency Actions. . . . . . . 35
19. Termination of Agreement. . . . 36
20. Announcements . . . . . . . . . 36
21. Records . . . . . . . . . . . . 37
22. Assistance after Closing. . . . 37
(a) Retained Liabilities . . . . . 37
(b) Allocation of Pulp . . . . . . 37
23. Tax Matters . . . . . . . . . . 38
(a) Apportionment of Income. . . . 38
(b) Audits . . . . . . . . . . . . 38
(c) Post-Closing Elections . . . . 38
(d) Section 338(h)(10)
Election . . . . . . . . . . . 38
(e) Allocation of Purchase
Price. . . . . . . . . . . . . 39
24. Survival of Representations
and Warranties . . . . . . . . . . 39
25. Amendment and Waiver. . . . . . 39
26. Notices . . . . . . . . . . . . 39
27. Parties in Interest . . . . . . 40
28. Further Assurances. . . . . . . 40
29. No Waivers. . . . . . . . . . . 41
30. Governing Law . . . . . . . . . 41
31. Severability. . . . . . . . . . 41
32. Miscellaneous . . . . . . . . . 41
33. Arbitration of Disputes. . . . 41
EXHIBITS
A. Confidentiality Letter Agreement
B. Form of Auditors' Report
C. Obligations to be Assumed by Buyer
D. Promissory Note
<PAGE>
LIST OF SCHEDULES
Schedule 1(z) Guaranteed Obligations3
Schedule 1(bb) Intellectual Property4
Schedule 3(b) Reserves and Accruals
to Be Eliminated. . 6
Schedule 7(c) Organization of Cross
Pointe Group. . . .12
Schedule 7(d) Cross Pointe Financial
Statements. . . . .12
Schedule 7(f) Cross Pointe Leases13
Schedule 7(g) Title to Personal Property13
Schedule 7(h) Description of Real Property13
Schedule 7(i) Plant and Equipment14
Schedule 7(k) Employee Matters. .14
Schedule 7(l) Litigation. . . . .15
Schedule 7(n) Material Contracts.15
Schedule 7(o) Licenses and Permits16
Schedule 7(p) Insurance . . . . .16
Schedule 7(q) Employee Benefits .16
Schedule 7(r) Transactions with
Related Parties . .18
Schedule 7(s) Bank Accounts . . .18
Schedule 7(t) Tax Returns . . . .18
Schedule 7(u) Environmental, Health,
and Safety Information20
Schedule 7(w) Prospects; Outstanding
Commitments; Customers
and Suppliers . . .21
Schedule 9(b) Accounts Receivable25
Schedule 10(d) Form of Seller's Legal
Counsel's Opinion .26
Schedule 10(h) Environmental Information27
Schedule 11(c) Form of Buyer's Legal Counsel's Opinion28
Schedule 13 Agreement Regarding Employee Benefits29
Schedule 18(b) Categories of Environmental Conditions33
Schedule 23(e) Allocation Schedule39
<PAGE>
THIS AGREEMENT entered into this
21st day of February, 1995 between
Pentair, Inc., a Minnesota corporation
("Seller") and Noranda Forest Inc., a
Canada corporation ("Buyer");
WITNESSETH:
WHEREAS, Seller is the owner of all
of the issued and outstanding capital
stock of Cross Pointe Paper Corporation,
a Minnesota corporation ("Cross
Pointe"); and
WHEREAS, the Seller desires to sell
and the Buyer desires to purchase from
Seller all of the outstanding capital
stock of Cross Pointe in accordance with
the terms and provisions of this
Agreement;
NOW, THEREFORE, in consideration of
the foregoing premises and of the mutual
covenants and conditions herein
contained, the parties agree as follows:
1. Definitions. The terms below
shall have the following meanings under
this Agreement unless the context
clearly requires otherwise:
(a) "Agreement" means this Stock
Purchase Agreement and all
amendments made hereto by written
agreement between Buyer and Seller
including all Exhibits and
Schedules referred to herein.
(b) "Arbiter" is defined in Section
3(d).
(c) "Best Knowledge of Seller" when
modifying any representation or
warranty shall mean that no officer
of Seller or any member of the
Cross Pointe Group has any
knowledge that such representation
and warranty is not true and
correct to the same extent as
provided therein and that:
(i) Seller and each member of
the Cross Pointe Group has
exercised due diligence and has
made appropriate investigations
and inquiries of the officers
and business records of both
Seller and the Cross Pointe
Group; and
(ii) nothing has come to the
attention of Seller in the
course of such investigation
and review or otherwise which
would reasonably cause Seller,
in the exercise of due
diligence, to believe that such
representation and warranty is
not true and correct.
Such terms shall have a cognate
meaning as applied to Buyer.
(d) "Business Day" means a day on
which banks are open for business
in Minneapolis, Minnesota and in
Toronto, Ontario.
(e) "Buyer" means Noranda Forest
Inc., a Canada corporation, or its
permitted assignee.
(f) "Buyer's Financial Statements"
are defined in Section 8(d).
(g) "Code" means the Internal
Revenue Code of 1986, as amended.
(h) "Clayton Act" means 15 U.S.C.
section 12, et seq., as amended, and the
rules and regulations promulgated
thereunder from time to time.
(i) "Closing" means the actual
transfer and delivery of the
certificates evidencing all of the
issued and outstanding capital
stock of Cross Pointe, the delivery
of the Promissory Note and
documents providing for the
assumption of certain specified
liabilities, and the exchange and
delivery by the parties of such
other documents and instruments
contemplated by this Agreement.
(j) "Closing Date" means the date
five business days following the
date on which all conditions to the
Closing set forth in Sections 10
and 11 shall have been performed or
such other date as the parties
hereto shall mutually agree (but
shall not be earlier than the
expiration or termination of the
waiting period specified by Section
7A of the Clayton Act).
(k) "Confidential Information"
means all information designated as
"Evaluation Material" in the
Confidentiality Letter.
(l) "Confidentiality Letter" means
the confidentiality letter
agreement dated August 24, 1994
between Buyer and CS First Boston
Corp., acting as agent for Seller,
a copy of which is attached as
Exhibit A.
(m) "Cross Pointe" means Cross
Pointe Paper Corporation, a
Minnesota corporation.
(n) "Cross Pointe Financial
Statements" means the unaudited
consolidated financial statements
of Cross Pointe for the years ended
December 31, 1989 through 1994.
(o) "Cross Pointe Group" means
Cross Pointe, Dayton Paper,
Flambeau Paper, and Miami Paper, as
a group.
(p) "Dayton Paper" means Dayton
Paper Corp., a Minnesota
corporation.
(q) "Employee Benefits" means any
and all pension or welfare benefit
programs, plans, arrangements,
agreements and understandings for
employees generally or specific
individual employees of the Cross
Pointe Group to which Seller or
Cross Pointe contributes or is a
party, by which any of them may be
bound, or under which any of them
may have liability, including,
without limitation, pension or
retirement plans, deferred
compensation plans, bonus or
incentive plans, early retirement
programs, severance pay policies,
support funds, medical or dental
insurance, and payment or
reimbursement plans.
(r) "Employee Pension Benefit Plan"
means an employee pension benefit
plan as defined in Section 3(2) of
ERISA.
(s) "Environmental Conditions"
means the presence on or under any
of the facilities or properties of
the Cross Pointe Group, or the
escape, seepage, leakage, spillage,
discharge, emission, or release
from any such facilities or
properties, of any Hazardous
Material existing on the date of
Closing.
(t) "Environmental Costs" means
losses, liabilities, damages,
injuries, penalties, fines, costs,
expenses, and claims of any and
every kind whatsoever (including
reasonable attorneys' fees and
expenses), whether incurred or
identified with respect to, or as a
direct or indirect result of, any
Environmental Condition or
compliance with Environmental Laws,
including, without limitation, the
cost of any required or necessary
repair, cleanup, or detoxification
of any property.
(u) "Environmental Laws" means
federal, state, regional, county,
and local laws, statutes, rules,
regulations, and ordinances and
common law requirements relating to
the environment, including, without
limitation, those relating to
nuisance or trespass, releases,
discharges, emissions, or disposals
to air, water, land, or
groundwater, to the withdrawal or
use of groundwater, to the
treatment, storage, disposal, or
management of Hazardous Material,
to exposure to toxic, hazardous, or
other controlled, prohibited, or
regulated substances, to the
transportation, storage, disposal,
management, or release of gaseous
or liquid substances, and any
regulation, order, injunction,
judgment, declaration, notice, or
demand issued thereunder.
(v) "ERISA" means the Employee
Retirement Income Security Act of
1974, as amended.
(w) "ERISA Affiliate" means any
trade or business, whether or not
incorporated, that would be
aggregated with the Cross Pointe
Group for purposes of imposition of
liability under Title IV of ERISA.
(x) "Flambeau Lease" means that
Operative Lease Agreement listed on
Schedule 1(z) hereto and the
documents related thereto, copies
of which have been heretofore
delivered by Seller to Buyer.
(y) "Flambeau Paper" means Flambeau
Paper Corp., a Wisconsin
corporation.
(z) "Guaranteed Obligations" means
those obligations and liabilities
of Seller, listed on Schedule 1(z),
undertaken in respect of the Cross
Pointe Group, including without
limitation the guaranty obligations
of Seller under the Flambeau Lease.
(aa) "Hazardous Material" means
and includes (i) any pollutant or
contaminant regulated by any
governmental unit, (ii) petroleum
or petroleum products, including
crude oil, (iii) any asbestos or
insulation or other material
composed of or containing asbestos,
and (iv) any hazardous, toxic or
dangerous waste, substance, or
material defined as such in (or for
purposes of) the Comprehensive
Environmental Response,
Compensation and Liability Act, as
amended, any so-called state or
local "Superfund" or "Superlien"
law, or any other Environmental
Law.
(bb) "Intellectual Property"
means all patents, utility patents
and design patents and
registrations therefor, trademarks,
trade names, trademark rights and
trademark registrations, copyrights
and licenses listed on
Schedule 1(bb), as well as all
technical documentation reflecting
engineering and production data,
design data, plans, specifications,
drawings, technology, know-how,
trade secrets, software licenses,
manufacturing processes and all
documentary evidence thereof
relating to any members of the
Cross Pointe Group.
(cc) "Material Adverse Effect"
means an event or condition that is
so adverse that it could reasonably
be expected to materially and
adversely affect the conduct of the
business, operations, prospects, or
financial condition of the Cross
Pointe Group, taken as a whole.
(dd) "Miami Paper" means Miami
Paper Corp., a Minnesota
corporation.
(ee) "Net Book Value" means the
difference between (x) all assets,
including cash and cash equivalents
and deferred tax assets, less
(y) all liabilities, whether
current or long-term, including
deferred income taxes but excluding
any income taxes payable by Seller
under Section 23(a), all as
reflected on the Statement of Net
Book Value.
(ff) "PBGC" means the Pension
Benefit Guaranty Corporation.
(gg) "Promissory Note" is
defined in Section 3(a).
(hh) "Purchase Price" is
defined in Section 3(a).
(ii) "Purchase Price
Adjustment" is defined in Section
3(e).
(jj) "Seller" means Pentair,
Inc., a Minnesota corporation.
(kk) "Shares" means all of the
outstanding shares of capital stock
of Cross Pointe.
(ll) "Statement of Net Book
Value" means a consolidated
statement showing (x) all assets,
including cash and cash equivalents
and deferred tax assets, and
(y) all liabilities, whether
current or long-term, including
deferred income taxes but excluding
any income taxes payable by Seller
under Section 23(a) and including
or excluding assets and liabilities
pursuant to Section 3(b)(ii), of
the Cross Pointe Group as of the
close of business on the day
immediately preceding the Closing
Date.
(mm) "Tax Returns" means any
return, report, claim for refund,
or information return or statement
relating to any federal, state,
local or foreign income tax, excise
taxes, sales and use taxes, highway
use taxes, payroll taxes, tangible
and intangible personal property
taxes, real estate taxes, and
franchise taxes (including any
interest, penalty, or addition
thereto, whether or not disputed),
including any schedule or
attachment thereto (with respect to
federal income tax returns, those
returns relating to the Cross
Pointe Group's portion of Seller's
federal income tax return).
(nn) "Unknown Conditions" means
any Environmental Condition not
disclosed to Buyer on Schedule
10(h) or not revealed in Buyer's
preclosing investigation.
2. Purchase and Sale of Stock.
Subject to the terms and conditions
herein stated, Seller shall sell,
transfer and deliver to Buyer, and
Buyer shall purchase from Seller at
the Closing all of Seller's right,
title and interest in all of the
Shares. The Shares shall be
transferred free and clear of all
liens, claims, encumbrances,
charges, and other restrictions of
any nature whatsoever.
3. Purchase Price.
(a) Subject to adjustment as
provided in this Agreement, the
aggregate purchase price to be paid
by Buyer for the Shares shall be
$200,000,000 (the "Purchase
Price"). The Buyer shall pay the
Purchase Price in two installments.
Buyer shall deliver to Seller the
first installment of $100,000,000
at Closing. A second installment
of $100,000,000 shall be delivered
to Seller on December 31, 1995.
Buyer's obligation to pay the
second installment of the Purchase
Price shall be evidenced by a
Promissory Note delivered to Seller
at Closing (the "Promissory Note"),
which shall be in substantially the
same form attached hereto as
Exhibit D. The Purchase Price
assumes that the Net Book Value of
Cross Pointe, on a consolidated
basis, will be $134,000,000. If
the Net Book Value is different
from this amount, the Purchase
Price is subject to adjustment as
set forth in Section 3(e) hereof.
(b) (i) Seller shall prepare and
deliver to Buyer, within 60 days
following the Closing Date, the
Statement of Net Book Value. There
shall be attached to the Statement
of Net Book Value an annex setting
forth in reasonable detail the
computation of the Purchase Price
Adjustment (as defined in
Section 3(e) hereof) and the report
of Seller's auditors in the form of
Exhibit B. Seller shall cause the
Statement of Net Book Value to be
audited by Seller's auditors, and
the report of such auditors thereon
shall be delivered to Buyer within
the 60 day period. Seller's
auditors will observe a physical
inventory of the inventories of the
members of Cross Pointe Group as of
the close of business on the day
immediately preceding the Closing
Date. The taking of such inventory
shall be observed by Buyer and by
Buyer's auditors.
(ii) To the extent permitted by
generally accepted accounting
principles, the assets and
liabilities set forth in the
Statement of Net Book Value shall
be determined using the same
accounting methods, policies,
principles, practices, and
procedures, with consistent
classification, judgments, and
estimation methodology, as used in
determining assets and liabilities
included in the Cross Pointe
Financial Statements as of December
31, 1994, and, except as required
by generally accepted accounting
principles applied on a basis
consistent with the principles
applied in the preparation of the
Cross Pointe Financial Statements
as of December 31, 1994, the
Statement of Net Book Value shall
not take into account any changes
in circumstances or events
occurring after the close of
business on the day immediately
preceding the Closing Date, other
than the elimination of (x)
reserves for noncollection of
accounts receivable and for claims
and allowances for product
warranties not theretofore
specifically identified, (y)
reserves and accruals for
liabilities identified on Schedule
3(b), and (z) other reserves and
accruals for liabilities expressly
assumed by Seller pursuant to this
Agreement. In preparing the
Statement of Net Book Value, the
respective amounts included in the
Statement of Net Book Value for
litigation reserves and for any
other reserve the amount of which
was determined for the Cross Pointe
Financial Statements as of December
31, 1994 by subjective estimates
shall be equal to the respective
amounts (including the absence of a
reserve or zero) included in
respect of these items in the Cross
Pointe Financial Statements as of
December 31, 1994, except as
required to reflect changes in
circumstances or events (including
charges to reserves to reflect
costs incurred or payments made by
or on behalf of Cross Pointe)
occurring between December 31, 1994
and the close of business on the
day immediately preceding the
Closing Date (in which event the
preceding sentence shall govern the
determination of any changes in the
reserve). The provisions of this
Section 3(b)(ii), and the
definitions of the defined terms
used in this Section 3(b)(ii),
shall be set forth verbatim in Note
1 to the Statement of Net Book
Value.
(c) Seller shall afford Buyer
(including its employees, auditors,
agents, and professional advisors)
the opportunity to review and
comment upon drafts of the
Statement of Net Book Value (and
the computation of the Purchase
Price Adjustment annexed thereto)
prior to the finalization of the
same, and Seller and Buyer shall
attempt in good faith to resolve
any disputes with respect to the
calculations therein before the
final statement is rendered. In
connection therewith, Seller shall
arrange for the work papers of
Seller's auditors to be made
available to Buyer and Buyer's
auditors, and they may make
inquiries of representatives of
Seller and its auditors to the
extent deemed necessary by Buyer.
Buyer agrees to provide access to
employees of Cross Pointe, as well
as representatives of Buyer, to the
extent reasonably necessary to
enable Seller and its auditors to
prepare and audit the Statement of
Net Book Value.
(d) The Statement of Net Book Value
delivered by Seller to Buyer (and
the computation of the Purchase
Price Adjustment annexed thereto)
shall be conclusive and binding
upon the parties unless Buyer,
within 30 days after the delivery
to Buyer of the Statement of Net
Book Value, notifies Seller in
writing that Buyer disputes any of
the amounts set forth therein,
specifying the nature of the
dispute and the basis therefor.
The parties shall in good faith
attempt to resolve any dispute, in
which event the Statement of Net
Book Value and the computation of
the Purchase Price Adjustment, as
amended to the extent necessary to
reflect the resolution of the
dispute, shall be conclusive and
binding upon the parties. If the
parties do not reach agreement
resolving the dispute within 15
days after notice is given by Buyer
to Seller pursuant to the second
preceding sentence, the parties
shall submit the dispute to a
nationally recognized independent
accounting firm mutually agreeable
to the parties, which firm shall
not have had a material
relationship with either Buyer or
Seller or their respective
affiliates within the two years
preceding the appointment (the
"Arbiter"), for resolution. If the
parties cannot agree on the
selection of the independent
accounting firm to act as Arbiter,
the parties shall request the
American Arbitration Association in
Chicago, Illinois, to appoint such
a firm, and such appointment shall
be conclusive and binding upon the
parties. Promptly, but no later
than 30 days after its acceptance
of its appointment as Arbiter, the
Arbiter shall make a determination,
based solely on presentations by
Buyer and Seller, and not by
independent review, and shall
render a report as to the dispute
and the resulting computation of
the Statement of Net Book Value and
the Purchase Price Adjustment, if
any, which shall be conclusive and
binding upon the parties. In
resolving any disputed item, the
Arbiter (y) shall be bound by the
provisions of Section 3(b)(ii) and
(z) may not assign a value to any
item greater than the greatest
value for such item claimed by
either party or less than the
smallest value for such item
claimed by either party. The fees,
costs, and expenses of the Arbiter
(i) shall be borne by Buyer in the
proportion that the aggregate
dollar amount of such disputed
items so submitted that are
unsuccessfully disputed by Buyer
(as finally determined by the
Arbiter) bears to the aggregate
dollar amount of such items so
submitted and (ii) shall be borne
by Seller in the proportion that
the aggregate dollar amount of such
disputed items so submitted that
are successfully disputed by Buyer
(as finally determined by the
Arbiter) bears to the aggregate
dollar amount of such items so
submitted. Buyer and Seller each
shall make available to the other
(upon the request of the other)
their respective work papers
generated in connection with the
preparation or review of the
Statement of Net Book Value.
(e) If the Net Book Value, as set
forth in the Statement of Net Book
Value which has become conclusive
and binding on the parties pursuant
to the provisions of Section 3(d),
exceeds $134,000,000, the Purchase
Price shall be increased by the
amount of the excess. If the Net
Book Value is less than
$134,000,000, the Purchase Price
shall be reduced by the amount of
the excess of $134,000,000 over the
Net Book Value. (Any such
adjustment is referred to herein as
the "Purchase Price Adjustment").
(f) The first $5,000,000 of any
Purchase Price Adjustment, whether
an increase or a decrease, shall be
paid without interest by wire
transfer on the business day
immediately preceding the date on
which the Promissory Note is
payable. Any Purchase Price
Adjustment in excess of $5,000,000,
whether an increase or a decrease,
shall bear interest and be paid by
wire transfer on the third Business
Day following (i) the last day on
which Buyer may, pursuant to the
first sentence of Section 3(d),
notify Seller that it disputes any
of the amounts set forth in the
Statement of Net Book Value, if
there shall have been no dispute
between the parties with respect
thereto, or such earlier date as
Buyer shall advise Seller of the
absence of any dispute, (ii) the
date mutual agreement is reached as
to the amount of the Purchase Price
Adjustment, if any, in the event of
a dispute that is settled by the
parties without resort to the
Arbiter, or (iii) the receipt of
the report of the Arbiter in the
event of a dispute which is settled
by the Arbiter, as applicable. The
portion of the Purchase Price
Adjustment in excess of $5,000,000
shall bear interest at an annual
rate equal to the announced large
business prime rate of Morgan
Guaranty Trust Company of New York
from the Closing Date to but not
including the date of payment. Any
such wire transfer by Buyer to
Seller shall be made in accordance
with Section 4. Any such wire
transfer by Seller to Buyer shall
be made to an account in the United
States designated by Buyer in
writing at least three Business
Days prior to the date of payment.
4. Payment. All payments in
respect of the Purchase Price shall
be made in U.S. dollars in
immediately available funds. The
payment of the first installment
of the Purchase Price
($100,000,000) by Buyer to Seller
at the Closing shall be sent by
wire transfer at the completion of
the Closing on the Closing Date.
The payment of the Promissory Note
by Buyer to Seller on December 31,
1995 shall be sent by wire transfer
by the close of the Business Day
next following December 31, 1995.
All payments in respect of the
Purchase Price by Buyer to Seller
shall be by wire transfer to First
Bank National Association, Account
No. xxx-xxxxxxx (ABA wire transfer
routing number 091000022), marked
to the attention of Karen Johnson,
or to such other account and to the
attention of such other person in
the United States as Seller may
otherwise direct Buyer in writing
at least three business days prior
to the payment date. The
Promissory Note shall not be
subject to set-off except for
non-payment of amounts that (a) Seller
agrees in writing are owed by
Seller to Buyer or (b) have been
determined to be owed by Seller to
Buyer by an arbitral award in
accordance with Section 3(h) or
Section 33. Buyer hereby waives
any further defenses and rights of
set-off, whether equitable or legal
in nature, that it may be entitled
to assert against Seller with
respect to payment of the
Promissory Note.
5. Assumption of Liabilities. At
Closing, Buyer shall assume and
agree to satisfy and perform, to
the extent not satisfied or
performed prior to the Closing
Date, without any cost or charge to
Seller, those obligations of Seller
specifically set forth in Exhibit C
attached occurring after the
Closing Date. Buyer shall assume
no other obligations or liabilities
of Seller. If the assumption of
any liabilities assumed by Buyer
under this Section 5 requires the
consent of any third party, Seller
and Buyer agree they will use their
reasonable best efforts to obtain
such written consent to such
assumption, unless otherwise
agreed; failing such consent, Buyer
shall indemnify Seller in
accordance with the provisions of
Sections 15 and 16 hereof against
any claim arising out of the
specifically assumed liabilities.
6. Closing. The Closing shall
take place on the Closing Date at
the offices of Henson & Efron, P.A.
in Minneapolis, Minnesota, at 10:00
o'clock a.m., local time, or at
such other time and place as may be
mutually agreed upon. Buyer and
Seller each agree they shall use
their reasonable best efforts and
shall cause all relevant affiliates
to use their reasonable best
efforts to obtain fulfillment of
all conditions to Closing set forth
in Sections 10 and 11 hereof as
soon as reasonably practicable.
At the Closing, Seller shall
deliver to Buyer certificates
evidencing ownership of all of the
Shares, in form ready for transfer
and duly endorsed to Buyer,
together with such other documents
and instructions as provided
herein, reasonably satisfactory in
form and substance to Buyer and its
counsel, as shall be required to
vest in Buyer good and marketable
title, free and clear of all liens,
charges and encumbrances in and to
the Shares.
At the Closing, Buyer shall also
deliver to Seller the Promissory
Note and such undertakings, and
other instruments, reasonably
satisfactory in form and substance
to Seller and its counsel, as shall
be required to cause Buyer to
assume the obligations as provided
in Section 5.
7. Seller's Representations,
Warranties, and Covenants. Each of
the Schedules to which reference is
made in this Section 7 has been
heretofore delivered separately by
Seller to Buyer in accordance with
the references contained in this
Section 7. Seller represents,
warrants, and covenants to the
Buyer as follows:
(a) Organization and Authority of
Seller. Seller is a duly organized
and validly existing corporation in
good standing in the state of
Minnesota. Seller is the
registered and beneficial owner of
and has the complete and
unrestricted right, power and
authority to sell, transfer and
assign the Shares pursuant to this
Agreement. The execution, delivery
and performance of this Agreement
and the consummation of the
transactions contemplated hereby
have been duly authorized by the
Board of Directors of Seller, and
no action by Seller's shareholders
is required to approve or
consummate the transactions
contemplated by this Agreement.
(b) Valid and Enforceable
Agreement. This Agreement
constitutes a valid and binding
agreement of Seller, enforceable in
accordance with its terms, except
insofar as enforceability may be
limited by bankruptcy, insolvency,
reorganization, moratorium or
similar laws affecting the rights
of creditors generally, and by
general equitable principles.
Neither the execution and delivery
of this Agreement, nor the
consummation of the transactions
contemplated hereby, nor the
performance of Seller's obligations
hereunder materially violates or
conflicts with, results in a
material breach of, or constitutes
a material default under (i) any
law, regulation, judgment or order,
decree, award or ruling to which
Seller or any member of the Cross
Pointe Group is subject, (ii) the
Articles of Incorporation or By-Laws
of Seller or any member of the
Cross Pointe Group, or
(iii) subject to the obtaining of
necessary consents under various
loan agreements, guarantees,
leases, and other agreements, any
agreement or other restriction of
any kind or character to which
Seller or any member of the Cross
Pointe Group is a party, by which
Seller or any member of the Cross
Pointe Group is bound, or to which
any of the properties of any member
of the Cross Pointe Group is
subject. Except as contemplated by
Section 9(a)(vi), no approval,
authorization, action, or filing
with any governmental authority is
required for the consummation of
the transactions contemplated by
this Agreement.
(c) Organization of Cross Pointe
Group.
(i) Cross Pointe is a duly
organized and validly existing
corporation in good standing in
the State of Minnesota and in
every jurisdiction where the
nature of its business or
properties require
qualification to do business,
and has all requisite corporate
power and authority to own and
lease its properties and to
carry on its business as
presently conducted in all
states in which it currently
does business.
All of the outstanding shares
of capital stock of Cross
Pointe have been duly
authorized and validly issued,
are fully paid and
nonassessable, and are owned,
of record and beneficially, by
Seller and are free and clear
of all liens, claims,
encumbrances and restrictions
whatsoever. No shares of
capital stock of, or other
ownership interest in, Cross
Pointe are reserved for
issuance, and there are no
outstanding options, warrants,
calls, rights, subscriptions,
claims of any character,
agreements, arrangements,
obligations, convertible or
exchangeable securities, or
other commitments, contingent
or otherwise, relating to the
capital stock of, or other
ownership interest in, Cross
Pointe pursuant to which it is
or may become obligated to
issue, purchase, or exchange
any shares of its capital
stock.
Cross Pointe does not own,
directly or indirectly, any
capital stock or other equity
or ownership or proprietary
interest in any other
corporation, partnership,
association, trust, joint
venture or other entity other
than Dayton Paper, Flambeau
Paper, and Miami Paper and the
shares of Chippewa and Flambeau
Improvement Corporation
referred to in subparagraph
(iii) of this Section 7(c).
(ii) Dayton Paper is a duly
organized and validly existing
corporation in good standing in
Minnesota and in every
jurisdiction where the nature
of its business or properties
require qualification to do
business, and has all requisite
corporate power and authority
to own and lease its properties
and to carry on its business as
presently conducted in all
states in which it currently
does business.
All of the outstanding shares
of capital stock of Dayton
Paper have been duly authorized
and validly issued, are fully
paid and nonassessable, and are
owned, of record and
beneficially, by Cross Pointe
and are free and clear of all
liens, claims, encumbrances and
restrictions whatsoever. No
shares of capital stock of, or
other ownership interest in,
Dayton Paper are reserved for
issuance, and there are no
outstanding options, warrants,
calls, rights, subscriptions,
claims of any character,
agreements, arrangements,
obligations, convertible or
exchangeable securities, or
other commitments, contingent
or otherwise, relating to the
capital stock of, or other
ownership interest in, Dayton
Paper pursuant to which it is
or may become obligated to
issue, purchase, or exchange
any shares of its capital
stock.
Dayton Paper does not own,
directly or indirectly, any
capital stock or other equity
or ownership or proprietary
interest in any other
corporation, partnership,
association, trust, joint
venture or other entity.
(iii) Flambeau Paper is a duly
organized and validly existing
corporation in good standing in
Wisconsin and in every
jurisdiction where the nature
of its business or properties
require qualification to do
business, and has all requisite
corporate power and authority
to own and lease its properties
and to carry on its business as
presently conducted in all
states in which it currently
does business.
All of the outstanding shares
of capital stock of Flambeau
Paper have been duly authorized
and validly issued, are fully
paid and nonassessable, and are
owned, of record and
beneficially, by Cross Pointe
and are free and clear of all
liens, claims, encumbrances and
restrictions whatsoever. No
shares of capital stock of, or
other ownership interest in,
Flambeau Paper are reserved for
issuance, and there are no
outstanding options, warrants,
calls, rights, subscriptions,
claims of any character,
agreements, arrangements,
obligations, convertible or
exchangeable securities, or
other commitments, contingent
or otherwise, relating to the
capital stock of, or other
ownership interest in, Flambeau
Paper pursuant to which it is
or may become obligated to
issue, purchase, or exchange
any shares of its capital
stock.
Flambeau Paper does not own,
directly or indirectly, any
capital stock or other equity
or ownership or proprietary
interest in any other
corporation, partnership,
association, trust, joint
venture or other entity other
than 175 shares of Chippewa and
Flambeau Improvement
Corporation.
(iv) Miami Paper is a duly
organized and validly existing
corporation in good standing in
Minnesota and in every
jurisdiction where the nature
of its business or properties
require qualification to do
business, and has all requisite
corporate power and authority
to own and lease its properties
and to carry on its business as
presently conducted in all
states in which it currently
does business.
All of the outstanding shares
of capital stock of Miami Paper
have been duly authorized and
validly issued, are fully paid
and nonassessable, and are
owned, of record and
beneficially, by Cross Pointe
and are free and clear of all
liens, claims, encumbrances and
restrictions whatsoever. No
shares of capital stock of, or
other ownership interest in,
Miami Paper are reserved for
issuance, and there are no
outstanding options, warrants,
calls, rights, subscriptions,
claims of any character,
agreements, arrangements,
obligations, convertible or
exchangeable securities, or
other commitments, contingent
or otherwise, relating to the
capital stock of, or other
ownership interest in, Miami
Paper pursuant to which it is
or may become obligated to
issue, purchase, or exchange
any shares of its capital
stock.
Miami Paper does not own,
directly or indirectly, any
capital stock or other equity
or ownership or proprietary
interest in any other
corporation, partnership,
association, trust, joint
venture or other entity.
(v) Schedule 7(c) sets forth
each jurisdiction in which each
member of the Cross Pointe
Group is qualified to transact
business, the names and titles
of each of their respective
executive officers and
directors, and the number and
description of their respective
authorized and outstanding
shares of capital stock and
other securities.
(d) Financial
Statements. Schedule 7(d) consists
of the Cross Pointe Financial
Statements. The Cross Pointe
Financial Statements were prepared
in accordance with the books and
records of the Cross Pointe Group
which were used in the preparation
of Seller's audited consolidated
financial statements for the
corresponding periods. The books
and records of the Cross Pointe
Group are true and correct and
present fairly and disclose in all
material respects the financial
position of Cross Pointe; and all
material financial transactions
have been accurately recorded in
these books and records. All of
the Cross Pointe Financial
Statements were prepared in
accordance with generally accepted
accounting principles, consistently
applied, but do not include all
information and footnotes required
by generally accepted accounting
principles for complete financial
statements. The Cross Pointe
Financial Statements reflect all
assets and liabilities of the Cross
Pointe Group. Schedule 7(d) and
the other Schedules hereto identify
all contingent liabilities that are
not reflected as liabilities in the
Cross Pointe Financial Statements.
The Cross Pointe Financial
Statements present fairly the
financial position of the Cross
Pointe Group and the results of
their operations as of the date and
for the periods indicated and
fairly set forth the information
purported to be shown therein. All
adjustments, consisting of normal
recurring accruals and eliminations
and other similar adjustments,
considered necessary for a fair
presentation have been included.
(e) No Material Change. Since
December 31, 1994 there has been:
(i) No event or condition that
would be material and adverse
to any member of the Cross
Pointe Group, whether arising
as a result of any legislative
or regulatory change,
revocation of any license or
right, or other anticipated or
unanticipated event or
occurrence;
(ii) No increase in the rate or
terms of compensation payable
or to become payable by any
member of the Cross Pointe
Group to its directors,
officers, or key employees or
increase in the rate of terms
of any bonus, pension, or other
employee benefit plan, except
in each case increases
occurring in the ordinary
course of business in
accordance with the customary
practices of the Cross Pointe
Group; or
(iii) No occurrence of a
material liability or
obligation, or the discharge of
a material liability or
obligation, except in the
ordinary course of business of
the Cross Pointe Group.
(f) Leases. Seller has furnished
to Buyer copies of all leases and
subleases of any real or personal
property used in the operations of
the Cross Pointe Group (including
without limitation the Flambeau
Lease) to which it is a party, as
listed on Schedule 7(f). No
material default exists currently
or shall exist, as of the Closing
Date, in any such lease (including
without limitation the Flambeau
Lease) or sublease, and each is and
shall be in full force and effect
in accordance with its terms, as
amended from time to time.
(g) Title to Personal Property.
Each member of the Cross Pointe
Group has good and marketable title
to its respective owned personal
property as reflected in the Cross
Pointe Financial Statements, free
and clear of all liens, claims,
encumbrances and restrictions,
except (i) those reflected on
Schedule 7(g) and (ii) defects in
title, and liens, charges and
encumbrances, if any, as do not
materially detract from the value
or use of the personal property.
(h) Realty. Schedule 7(h) contains
an accurate legal description of
all real property presently owned
by any member of the Cross Pointe
Group, each of which has good and
marketable title to its real
property free and clear of all
mortgages, liens and encumbrances,
except for those set forth in
Schedule 7(h) or for minor
imperfections of title and
encumbrances, if any, which do not
materially detract from the value
or use of the real property.
(i) Plant and Equipment.
Schedule 7(i) contains an accurate
list of all plant and equipment
owned by any member of the Cross
Pointe Group that still appears on
the depreciation schedule of the
Cross Pointe Group. No member of
the Cross Pointe Group has disposed
of any plant or equipment, except
for dispositions in the ordinary
course of business consistent with
prior practices. To the best
knowledge of Seller, all plant,
structures, and equipment currently
being used in the conduct of the
operations of the members of the
Cross Pointe Group are in all
material respects in good operating
condition and repair, subject to
normal wear and tear and, to the
best of Seller's knowledge, are
free from material structural or
mechanical deficiencies, except as
disclosed on Schedule 7(i). No
person, firm, or corporation other
than the members of the Cross
Pointe Group has any interest in
any of the plant and equipment of
the Cross Pointe Group, or in any
property, process, or product used
by the members of the Cross Pointe
Group or relating to their
business, except as expressly
disclosed on one of the Schedules
described in this Section 7.
(j) Intellectual Property.
Schedule 1(bb) contains an accurate
list of all Intellectual Property
owned or used by any of the members
of the Cross Pointe Group and
indicates that which is owned and
that which is licensed from others
(including the names of all
licensors and the expiration dates
of all licenses). The Intellectual
Property identified in Schedule
1(bb) includes all of the
Intellectual Property now used in
or necessary for the operation of
the business of the Cross Pointe
Group as presently being conducted.
To the best knowledge of Seller, no
one is infringing upon any rights
of the members of the Cross Pointe
Group with respect to any of the
Intellectual Property, and no
member of the Cross Pointe Group is
infringing on or otherwise acting
adversely to the rights of any
person under, or in respect to, any
patents, patent rights, licenses,
trademarks, trade names, or
trademark rights owned by any
person or persons, and there is no
claim or action pending or
threatened with respect thereto.
(k) Employee Matters.
Schedule 7(k) contains an employee
list (census) for the Cross Pointe
Group which also sets forth a
description of its labor relations
experience. None of the Cross
Pointe Group is a party to any
collective bargaining agreement,
and since January 1, 1992 no labor
union has attempted to organize any
of their respective employees,
except as disclosed in
Schedule 7(k). Except as set forth
in Schedule 7(k), there have not
been any material work stoppages,
strikes or other significant labor
troubles at any of the locations
owned or leased by the Cross Pointe
Group. Except as set forth in
Schedule 7(k), none of the Cross
Pointe Group has received any labor
grievances or had any arbitration
cases brought against any of them
in connection with operations of
their business, and there are no
arbitration cases pending in
connection with the operation of
their business. Except as set
forth on Schedule 7(k), Seller has
not been advised of any material
pending complaint filed with the
National Labor Relations Board or
any other governmental agency
alleging unfair labor practices,
human rights violations, employment
discrimination charges, or the like
against any member of the Cross
Pointe Group, and there are no
existing facts which might result
in any such complaint or charge.
(l) Litigation. Except as set
forth on Schedule 7(l), there are
no material legal actions, suits,
arbitrations or other legal,
administrative or governmental
proceedings or investigations
(other than tax audits or
investigations) pending or, to the
best knowledge of Seller threatened
against any member of the Cross
Pointe Group.
(m) Compliance with Laws. The
operations of the members of the
Cross Pointe Group have been and
are being in all material respects
conducted in accordance with all
applicable laws, rules and
regulations of applicable
governmental authorities.
(n) Material Contracts.
Schedule 7(n) and the other
Schedules to this Agreement list
all contracts and arrangements,
written or oral, which alone or
together with other contracts,
agreements, commitments and
arrangements with the same party
are material to the Cross Pointe
Group. Except for leases,
contracts, agreements, commitments
and arrangements identified on
Schedule 7(n), no member of the
Cross Pointe Group is a party to or
bound by any oral or written:
(i) Contract, agreement,
commitment, or arrangement for
personal services or severance
agreement or arrangement
involving annual expenditures
in excess of $50,000;
(ii) Dealer's, distributor,
sales agency, or brokerage
agreement;
(iii) Lease, contract,
agreement, commitment, or
arrangement relating to the
sale to or use by others of any
of the real property identified
on either Schedule 7(f) or
Schedule 7(h);
(iv) Contract, agreement,
commitment, or arrangement for
capital expenditures in excess
of $100,000 for any one project
which is not included in the
business plan made a part of
Schedule 7(w);
(v) Contract, agreement,
commitment, or arrangement
involving more than $250,000
for the purchase of materials,
goods, or supplies, for the
sale of products, or for the
performance of services, in any
case providing for delivery or
performance over a period of
more than 90 days from the date
of this Agreement or involving
more than $250,000;
(vi) Contract, agreement,
commitment, or arrangement by
any member of the Cross Pointe
Group restricting the
territories in which it may do
business, limiting the type of
business that it may do in any
territory, or restricting its
right to sell products to any
customer or group of customers.
(vii) Lease, contract,
agreement, commitment, or
arrangement not made in the
ordinary course of business;
(viii) Any other lease,
contract, agreement,
commitment, or arrangement that
is material to the business of
the Cross Pointe Group, taken
as a whole.
All members of the Cross Pointe
Group have, in all material
respects, performed and are
performing all of the
obligations required to be
performed by them to date and
are not, and will not be as of
the Closing Date, in material
default under such leases,
contracts, agreements,
commitments, or arrangements,
and no notice of default has
been received with respect to
any such lease, contract,
agreement, commitment or
arrangement. To the best
knowledge of Seller, no other
party to any such leases,
contracts, agreements,
commitments, or arrangements is
in material default thereof.
To the best knowledge of
Seller, no event has occurred
that with notice or the lapse
of time or both would
constitute a default by any
party under any such leases,
contracts, agreements,
commitments, or arrangements.
All such contracts and
arrangements are and, except
for certain contracts for the
purchase of kraft pulp referred
to in Section 22(b), will on
the Closing Date be in good
standing and full force and
effect according to their
terms.
(o) Licenses and Permits. Except
as set forth on Schedule 7(o), each
member of the Cross Pointe Group
has all requisite licenses,
permits, and zoning variances to
operate its business as currently
conducted, and neither Seller nor
any member of the Cross Pointe
Group has been advised of any
revocation or anticipated
revocation of any material permits,
licenses, or zoning variances, or
of any existing or pending zoning
or other regulatory changes, and no
revocation will result from the
sale and purchase of the Shares
under this Agreement.
(p) Insurance. Schedule 7(p)
contains an accurate and complete
list of insurance policies which
the members of the Cross Pointe
Group maintain. Except as set
forth on said Schedule, all such
policies are in full force and
effect and shall survive the
Closing.
(q) Employee Benefits.
(i) Schedule 7(q) contains a
complete listing of Employee
Benefits provided to employees
of the Cross Pointe Group.
Included in Schedule 7(q) are
true and correct copies of all
the Employee Benefits, the most
recent determination letters
from the Internal Revenue
Service with respect thereto,
the most recent annual reports
(Forms 5500 and the schedules
thereto), the most recent
summary plan descriptions, and
the most recent actuarial
valuations. Except as set
forth on Schedule 7(q), the
costs of all such Employee
Benefits which are paid
currently by members of the
Cross Pointe Group are
reflected as expenses in the
Cross Pointe Financial
Statements; and the cost of
such Employee Benefits which
are, in whole or in part, not
paid currently are adequately
reserved for in the Cross
Pointe Financial Statements.
Except as identified in
Schedule 7(q), none of the
Employee Benefits is an
Employee Pension Benefit Plan.
(ii) All of the Employee
Benefits and related trusts are
in form and have been
administered in material
compliance with all applicable
laws, including ERISA and the
Code; none of the Employee
Benefits or related trusts, or
any administrator or trustee
thereof, or party-in-interest
or disqualified person thereto
has engaged in a transaction
that could cause any of them to
be liable for a civil penalty
under Section 502(i) or other
sections of ERISA or a tax
under Section 4975 or 4976 or
other sections of Chapter 43 of
Subtitle D of the Code; all
amounts required to be paid or
accrued by the Cross Pointe
Group to or pursuant to each of
the Employee Benefits or
related trusts on or before the
date of this Agreement have
been paid or accrued; no
Employee Pension Benefit Plan
has incurred any "accumulated
funding deficiency," as defined
in Section 412 of the Code; no
"reportable event" within the
meaning of Title IV of ERISA
has occurred with respect to
any Employee Pension Benefit
Plan other than in connection
with the transactions
contemplated hereby; and,
except as described in
Schedule 7(q), the Cross Pointe
Group is not obligated to pay
any additional amounts to or
pursuant to, and has not
guaranteed the obligations of
any Employee Benefits or
related trust.
(iii) No liability under
Title IV of ERISA has been
incurred by the Cross Pointe
Group or any ERISA Affiliate
that has not been satisfied in
full, and no condition exists
that presents, nor with the
consummation of the
transactions contemplated by
this Agreement will present, a
material risk to the Cross
Pointe Group or an ERISA
Affiliate of incurring a
liability under such Title IV,
other than liability for
premiums due the PBGC.
(iv) No employees of the Cross
Pointe Group participate in any
"multi-employer plan" within
the meaning of Section 4001(3)
of ERISA; the Cross Pointe
Group has not contributed to or
been under any obligation at
any time to contribute to any
such multi-employer plan; and
the Cross Pointe Group and its
ERISA Affiliates do not have
any liability under ERISA for
any complete or partial
withdrawal from any such multi-employer plan.
(v) Neither the Cross Pointe
Group nor an ERISA Affiliate,
nor any of their respective
directors, officers, employees,
or fiduciaries, has committed
any material breach of
fiduciary responsibility
imposed by ERISA or any other
applicable law that would
subject the Cross Pointe Group
to liability under ERISA or any
other applicable law, contract,
agreement, or commitment.
(vi) The PBGC has not instituted
proceedings to terminate any
benefits plans in which any
member of the Cross Pointe
Group participates, and no
condition exists that presents
a material risk that such
proceedings will be instituted.
(vii) Except as described in
Schedule 7(q), no Employee
Benefit provides benefits,
including without limitation
death or medical benefits
(whether or not insured), with
respect to current or former
employees beyond their
retirement or other termination
of service (other than
(i) coverage mandated by
applicable law, (ii) death
benefits or retirement benefits
under any Employee Pension
Benefit Plan, (iii) deferred
compensation accrued on the
Cross Pointe Financial
Statements, or (iv) benefits
the full cost of which is borne
by the current or former
employee (or his or her
beneficiary)). If an Employee
Benefit is designed to satisfy
the requirements of
Section 125, Section 401,
Section 401(k), Section 409,
Section 501(c)(9),
Section 4975(e)(7), and/or
Section 4980B of the Code, the
Employee Benefit satisfies such
section. No "leased employee,"
as that term is defined in
Section 414(n) of the Code,
performs services for any
member of the Cross Pointe
Group.
(r) Transactions with Related
Parties. Except as set forth on
Schedules 7(f), 7(g), 7(n),
or 7(r), no member of the Cross
Pointe Group is a party to any
transaction or proposed
transaction, including, without
limitation, the leasing of real or
personal property, the purchase or
sale of raw materials or finished
goods, or the furnishing of
services, with Seller or any person
who is related to or affiliated
with Seller (other than another
member of the Cross Pointe Group)
involving the payment or accrual of
more than $1,000,000 during fiscal
years 1993 or 1994.
(s) Bank Accounts. Schedule 7(s)
sets forth a true and complete list
of all banks in which any member of
the Cross Pointe Group has an
account, safe deposit box or line
of credit, and the names and titles
of all persons authorized to draw
thereon or to have access thereto,
with the exception of bank accounts
used in connection with Seller's
normal cash management programs.
(t) Tax Matters.
(i) Schedule 7(t) contains
true and correct copies of the
Tax Returns of the Cross Pointe
Group for the periods ended
December 31, 1989, 1990, 1991,
1992, and 1993. Each member of
the Cross Pointe Group has
filed with the appropriate
governmental agencies all tax
returns and tax reports
(including, but not limited to,
those pertaining to income
taxes, excise taxes, sales and
use taxes, payroll taxes, real
property taxes, tangible and
intangible personal property
taxes, and franchise taxes)
required to be filed by it.
All such tax returns and
reports were correct and
complete in all material
respects. All taxes, interest,
penalties, and additions shown
or claimed to be due thereon
have been paid. No material
claim has been made by an
authority in a jurisdiction
where a member of the Cross
Pointe Group does not currently
file a tax return or report
that it is or may be subject to
taxation by that jurisdiction.
There are no liens or other
encumbrances of any kind on any
of the assets of the Cross
Pointe Group that arose in
connection with any failure (or
alleged failure) to pay any
tax.
(ii) No member of the Cross
Pointe Group has been a member
of an affiliated group (within
the meaning of Section 1504 of
the Code) filing a consolidated
federal Tax Return, other than
a group the common parent of
which is Seller.
(iii) Schedule 7(t) lists all
Tax Returns filed with respect
to any members of the Cross
Pointe Group for taxable
periods ended on or after
December 31, 1989, indicates
those Tax Returns that have
been audited and indicates
those Tax Returns that are
currently the subject of audit.
Except as set forth in
Schedule 7(t), there are no
agreements for the extension of
the periods for the assessment
or collection of any taxes, and
no statute of limitations in
respect of taxes relating to a
member of the Cross Pointe
Group has been waived.
(iv) None of the members of the
Cross Pointe Group is a party
to any income tax allocation or
sharing agreement.
(v) None of the members of the
Cross Pointe Group has any
liability for the taxes of any
person other than the members
of the Cross Pointe Group and
other members of the Seller's
consolidated group (A) under
Treasury Regulation section 1.1502-6
(or any similar provision of
state, local, or foreign law),
(B) as a transferee or
successor, (C) by contract, or
(D) otherwise.
(vi) None of the members of the
Cross Pointe Group has filed a
consent under Section 341(f) of
the Code concerning collapsible
corporations.
(vii) None of the members of the
Cross Pointe Group has made any
payments, is obligated to make
any payments, or is a party to
any agreement that under
certain circumstances could
obligate it to make any
payments that will not be
deductible by reason of
Section 280G of the Code.
(viii) None of the members of
the Cross Pointe Group has been
a United States real property
holding corporation within the
meaning of Section 897(c)(2) of
the Code during the applicable
period specified in
Section 897(c)(1)(A)(ii) of the
Code.
(u) Environmental, Health and
Safety Matters. Except as
disclosed in Schedule 7(u):
(i) The members of the Cross
Pointe Group have obtained all
permits, licenses, and other
authorizations that are
required for the operation of
their respective businesses and
the ownership and use of their
properties under federal,
state, and local laws and
regulations, contractual
obligations, common law and
other legal requirements
relating to public health and
safety, worker health and
safety, and pollution or
protection of the environment,
including any of the foregoing
relating to emissions,
discharges, releases, or
threatened releases of
Hazardous Materials into
ambient air, surface water,
ground water, or land, or
otherwise relating to the
manufacture, processing,
distribution, use, treatment,
storage, disposal, transport,
or handling of Hazardous
Materials.
(ii) The members of the Cross
Pointe Group have complied and
are in compliance in all
material respects with all
terms and conditions of such
required permits, licenses, and
authorizations, and have also
complied with and are in
compliance with all other
limitations, restrictions,
conditions, standards,
prohibitions, requirements,
obligations, schedules, and
timetables contained in any
code, plan, permit,
authorization, order, decree,
or judgment relating thereto
and demand letter issued,
entered, promulgated, or
approved thereunder.
(iii) The members of the Cross
Pointe Group have not expressly
by contract or other
affirmative act assumed any
liability or corrective or
remedial obligation of any
other person or party, other
than in connection with the
acquisition of the assets,
operations, and businesses of
Flambeau Paper, Miami Paper,
and Dayton Paper and then only
to the extent provided in the
documents relating to such
acquisitions.
(iv) No facts, events, or
conditions related to or
arising from the past or
present operations, properties,
or facilities of the Cross
Pointe Group or its affiliates
or, to the best knowledge of
Seller, its predecessors
interfere with, prevent
continued compliance with, or
give rise to any common law or
legal liability under any
Environmental Law or any law
relating to public health and
safety or worker health and
safety, including, without
limitation, liability for
cleanup, responsibility for
cleanup costs, or liability for
personal injury or property
damage.
(v) Neither the Cross Pointe
Group nor its affiliates or, to
the best knowledge of Seller,
its predecessors have disposed
of any Hazardous Materials in
any manner that may form the
basis for any present or future
claim, demand, or action
seeking cleanup of any site,
location, or body of water,
surface, or subsurface.
(vi) No underground storage
tanks, asbestos containing
material, or PCB-containing
equipment are present on any
real property owned, leased, or
operated by any member of the
Cross Pointe Group.
(vii) No lien in favor of a
governmental entity relating to
any liability of the Cross
Pointe Group or its affiliates
or, to the best knowledge of
Seller, its predecessors under
any law or order relating to
the environment has attached to
any property owned, leased, or
operated by the Cross Pointe
Group.
(v) Inventory. All inventories
reflected on the Cross Pointe
Financial Statements are, and all
inventories reflected on the
Statement of Net Book Value will
be, properly valued at the lower of
cost or market value on a first-in,
first-out basis in accordance with
generally accepted accounting
principles applied consistently and
used by Seller in the preparation
of Seller's financial statements,
including those dated as of
December 31, 1994. Inventories of
finished goods are of good and
saleable quality as classified,
whether of first line, job lot,
broke, or otherwise, and contain no
material amounts that are not
salable as classified in the
ordinary course of business.
Inventories of raw materials,
stores, and replacement parts are,
to the best knowledge of Seller,
(i) of good and merchantable
quality and contain no material
amounts that are not usable for the
purposes intended in the ordinary
course of the operations of the
members of the Cross Pointe Group;
(ii) in conformity with warranties
customarily given to purchasers of
like products; and (iii) at levels
adequate for and not excessive in
relation to the ordinary course of
the operations and in accordance
with past inventory stocking
practices of the Cross Pointe
Group.
(w) Prospects; Outstanding
Commitments; Customers and
Suppliers.
(i) Schedule 7(w) includes a
copy of the most current
business plan prepared for the
business of the Cross Pointe
Group. Seller has no knowledge
of, nor has it been informed
of, any facts inconsistent with
Buyer's intention of continuing
the business of the Cross
Pointe Group in accordance with
past practices, or of any
existing or anticipated changes
in the policies of the
customers, suppliers, or others
with whom they transact
business that could affect the
availability of materials,
supplies, or fuel in any
material respect, or of any
legislation or regulation that
will have a material and
adverse effect on the business
of the Cross Pointe Group in
accordance with past practices.
As of the date of this
Agreement, Seller has no
knowledge of any proposed or
contemplated changes in the
employment status of any
members of the managements of
the members of the Cross Pointe
Group.
(ii) None of the Cross Pointe
Group is bound by any
commitments for the delivery of
goods or the performance of
services in excess of its
ability to produce such goods
or to provide such services
during the time available to
satisfy such commitments. All
outstanding commitments for the
delivery of goods or the
performance of services were
made on a reasonable arm's
length basis, and Seller does
not know of any facts or
circumstances that have a
material and adverse effect on
the business of the Cross
Pointe Group in accordance with
past practices.
(iii) Schedule 7(w) also
contains a listing of all
significant customers of and
suppliers to the business of
the Cross Pointe Group for the
periods represented thereby.
Except as set forth on Schedule
7(w), no such significant
customer or supplier has
advised Seller or any member of
the Cross Pointe Group that the
volumes set forth therein will
be materially reduced in future
years.
Disclosure of any fact in any
provision of this Agreement or in
any Schedule to which reference is
made herein shall constitute
disclosure thereof for the purposes
of any other provision or Schedule.
8. Buyer's Representations and
Warranties. The Buyer represents
and warrants to the Seller as
follows:
(a) Organization. Buyer is a duly
organized and validly existing
corporation in good standing under
the laws of Canada. Buyer has all
requisite corporate power to own
its property and carry on its
business as presently conducted.
(b) Authority. The execution,
delivery and performance of this
Agreement and the consummation of
the transactions contemplated
hereby have been duly authorized by
the Board of Directors of Buyer.
(c) Valid and Enforceable
Agreement. This Agreement
constitutes a valid and binding
agreement of Buyer, enforceable in
accordance with its terms, except
insofar as enforceability may be
limited by bankruptcy, insolvency,
reorganization or similar laws
affecting the rights of creditors
generally, and general equitable
principles. Neither the execution
and delivery of this Agreement, nor
the consummation of the
transactions contemplated hereby
nor the performance of Buyer's
obligations hereunder violates or
conflicts with, results in a breach
of, or constitutes a default under
(i) any law regulation, judgment or
order, decree, award or ruling to
which Buyer is subject, (ii) the
Articles of Incorporation or By-Laws of Buyer, or (iii) any
agreement or other restriction of
any kind or character to which
Buyer is a party or by which Buyer
is bound.
(d) Financial Statements. Attached
hereto as Schedule 8(d) are the
Buyer's financial statements for
the year ended December 31, 1994
(the "Buyer's Financial
Statements"). The Buyer's
Financial Statements have been
prepared in accordance with and
accurately reflect its books and
records, were prepared in
accordance with generally accepted
accounting principles in Canada,
and fairly present the financial
position of the Buyer at December
31, 1994 and the results of its
operations for the year then ended.
(e) Investment Purposes. Buyer is
purchasing Shares for investment
purposes and not with a view toward
distribution within the meaning of
the Securities Act of 1933, as
amended.
(f) No Material Changes. Since
December 31, 1994, there has been
no material and adverse change in
the conduct of the business,
operations, prospects, or financial
condition of Buyer and its
subsidiaries, taken as a whole.
9. Other Covenants.
(a) Actions Pending Closing. From
the date hereof through the Closing
Date, Seller shall take, or cause
the members of the Cross Pointe
Group to take, all actions
necessary and appropriate to comply
with, or to refrain from taking any
action in breach of, the following
provisions for the period between
the execution of this Agreement and
the termination hereof or the
Closing Date, unless otherwise
agreed in writing by Buyer:
(i) Operations. Each member
of the Cross Pointe Group shall
conduct its operations only in
the ordinary course of business
consistent with its prior
practices. No member of the
Cross Pointe Group shall enter
into any transaction or perform
any act that would constitute a
breach of the representations,
warranties, or agreements
contained herein, other than a
breach of a representation or
warranty resulting from
transactions in the ordinary
course of business that result
in a Schedule to this Agreement
being out of date or
incomplete. No member of the
Cross Pointe Group shall
dispose of any plant or
equipment, except for
dispositions in the ordinary
course of business consistent
with prior practices. Each
member of the Cross Pointe
Group shall use its best
efforts to preserve its
business and its organization
intact, to keep available the
services of its present
employees, and to maintain its
assets and properties in good
repair, working order, and
condition.
(ii) Access to Records. Seller
and Cross Pointe shall make
available to Buyer (including
its agents and employees, and
its professional advisors), all
books and records relating to
the business of each member of
the Cross Pointe Group;
provided, however, that Seller
has not made, and shall not be
deemed to have made, any
representations or warranties
whatsoever with respect to any
of such books or records or any
other documents provided to or
made available to Buyer, except
as expressly set forth in this
Agreement and the Schedules
referred to herein.
(iii) Access to Facilities. In
addition to its rights under
Section 10(h) hereof, Buyer
(including its agent and
employees, and its professional
advisors), shall be given full
access during regular business
hours to the physical
facilities of members of the
Cross Pointe Group, upon
appointment with the general
manager of each such facility
and accompanied by such general
manager or his or her
designee(s). Seller and the
members of the Cross Pointe
Group and their respective
employees and professional
advisors shall cooperate fully
with Buyer in its examinations
and inspections, but not to the
detriment of the ongoing
operations of their business
operations prior to Closing.
(iv) Transition Incentives.
Seller may announce and pay to
the employees of each member of
the Cross Pointe Group
transition incentives,
established by Seller in its
sole and absolute discretion,
to encourage their continued
employment and achievement of
performance targets for the
relevant business prior to
Closing. Seller shall disclose
the nature and cost of the
transition incentives to Buyer.
The costs and administration of
all such transition incentives
shall be the sole
responsibility of Seller.
(v) Release of Guarantees.
Seller shall use its best
efforts to obtain its release
from, and the substitution (as
required) of Buyer as, the
guarantor of the Guaranteed
Obligations, and Buyer shall
cooperate with Seller in this
effort. Each party shall pay
its own costs in connection
with seeking and obtaining such
releases, but if any additional
or different payments or terms
are imposed by any lease
participants in connection
therewith, the costs or the
performance thereof shall be
borne by Seller, unless
otherwise agreed by Buyer.
(vi) Hart-Scott-Rodino Filings.
Seller and Buyer shall
cooperate in the prompt
preparation and filing of all
notifications and reports which
may be required with respect to
the transactions contemplated
by this Agreement pursuant to
Section 7A of the Clayton Act.
Seller and Buyer shall also
cooperate in responding
promptly to all inquiries from
the Federal Trade Commission or
the Department of Justice
resulting from the filing of
such notifications and reports.
(vii) Notice of Developments.
Each party hereto shall notify
the other of any development(s)
which might or shall constitute
a breach of any of the
warranties and representations
in Section 7 which could have a
Material Adverse Effect. Buyer
shall have the right to
terminate this Agreement within
the period of 10 business days
from the date such notice is
given. If within such 10 day
period, Buyer shall not have
exercised its right to
terminate this Agreement, the
written notice shall be deemed
to have amended this Agreement
and the relevant schedules
attached thereto, to have
qualified the representations
and warranties contained in
Section 7 above, or to have
cured any misrepresentation or
breach of warranty that
otherwise might have existed
hereunder by reason of such
development, including for
purposes of Section 15 hereof,
and the party making the
warranty or representation
shall continue to use its
reasonable best efforts to
obtain fulfillment of all
conditions to Closing set forth
in Sections 10 and 11 hereof,
including the cure of the
actual or potential breach to
which reference is made in the
notice. The provisions hereof
shall apply if there is any
development(s) which might or
shall constitute a breach of
any of the warranties and
representations in Section 8
which could have a material
adverse effect on the Buyer
mutatis mutandis.
(viii) Compliance with
Conditions. Seller and Buyer
shall use all reasonable
efforts to cause the conditions
set forth in Sections 10 and 11
hereof to be satisfied as soon
as reasonably practicable.
(b) Accounts Receivable. Seller
represents and warrants to Buyer
that Schedule 9(b) sets forth a
list of all accounts receivable of
the Cross Pointe Group as of the
most recent practicable date. None
of the accounts receivable listed
on such list are more than 90 days
old except as otherwise disclosed
on such list. All accounts
receivable to be reflected on the
Statement of Net Book Value will be
due and valid claims against
account debtors for goods or
services delivered or rendered,
subject to no defenses, offsets, or
counterclaims. No such accounts
receivable will be subject to prior
assignment, claim, lien, or
security interest. Payments
received by members of the Cross
Pointe Group from customers will be
applied against such customers'
oldest outstanding accounts
receivable first. Upon Buyer's
good faith business determination
that the balance of any account
receivable is not collectible,
Buyer shall notify Seller, who
shall promptly pay to the
appropriate member of the Cross
Pointe Group the amount of the
account receivable. Upon receipt
of payment therefor, Buyer shall
cause that member of the Cross
Pointe to assign the account
receivable to Seller, free and
clear of any claims or liens, and
Seller shall have the right
thereafter to collect the account
receivable for its own account.
(c) Product Warranty Claims. As of
the Closing Date, no member of the
Cross Pointe Group will have
incurred any unpaid liabilities to
customers for claims and allowances
for product warranties, except
those granted in the ordinary
course of business and reflected in
the Statement of Net Book Value.
After Closing, members of the Cross
Pointe Group may, in their good
faith business judgment (exercised
without regard to the availability
of recourse against Seller under
this Agreement) and in the ordinary
course of business on a basis
consistent with their prior
practices, grant claims and
allowances for product warranties
to their customers for products
produced prior to the Closing Date.
Upon the granting of any such
claims or allowances, Seller shall
promptly pay to Cross Pointe the
amount thereof.
10. Conditions Precedent to
Obligations of Buyer. The
obligations of Buyer hereunder
(unless expressly waived by Buyer)
are subject to the fulfillment,
prior to or at Closing, as the case
may be, of each of the following
conditions:
(a) No Material Errors; Performance
of Obligations. The
representations and warranties of
Seller herein shall be true and
correct as of the Closing Date,
except for misrepresentations and
breaches of warranties that do not,
in the aggregate, have a Material
Adverse Effect. Seller shall have
performed in all material respects
all of the obligations to be
performed by it hereunder in the
time and manner herein stated.
(b) Officer's Certificate. Seller
shall have delivered to Buyer a
certificate, dated as of the
Closing Date, executed by its
President and Secretary, and in
form and substance satisfactory to
Buyer, certifying that the
covenants and conditions specified
in this Agreement to be met by
Seller have been performed or
fulfilled in all material respects
and that the representations and
warranties herein made by Seller
are true and correct in all
material respects as of such date.
(c) Certified Copy of Resolutions.
Seller shall have delivered to
Buyer a certified copy of
resolutions adopted by Seller's
Board of Directors authorizing the
execution and delivery of this
Agreement and the consummation of
the transactions contemplated
hereby.
(d) Opinion of Seller's Counsel.
Seller shall have delivered to the
Buyer the opinion of its counsel,
dated as of the Closing Date,
substantially in the form of
Schedule 10(d).
(e) Injunctions. No injunction
shall have issued restricting or
prohibiting the transactions
contemplated by this Agreement.
(f) Clayton Act Matters. The
waiting period required by
Section 7A of the Clayton Act shall
have expired or been terminated.
(g) Other Matters. All corporate
and other proceedings and actions
taken in connection with the
transactions contemplated hereby
and all certificates, opinions,
agreements, instruments, and
documents mentioned herein or
incident to any such transaction
shall be delivered to Buyer and be
reasonably satisfactory in form and
substance to Buyer and its counsel.
(h) No Evidence of Hazardous
Material; Licenses and Permits.
The results of any inspections,
soil test borings, soil tests,
drainage tests, surveys,
topographical analyses, engineering
studies or other investigations
performed or obtained by Buyer
shall not have disclosed evidence
of Hazardous Materials in, on, or
adjacent to any of the real
property of any member of the Cross
Pointe Group, other than those
Environmental Conditions listed on
Schedule 10(h) and those which, in
the aggregate, would not have a
Material Adverse Effect. Seller
shall not have received any
evidence that there are existing
violations of any law, ordinance,
regulation or order relating to
air, water or land pollution or
Hazardous Material other than those
described in Schedule 10(h) or that
any requisite environmental license
or permit or any occupancy, use or
building permits or other approvals
from applicable governmental
authorities are currently required
for the continued operation of the
facilities owned by any member of
the Cross Pointe Group which have
not been obtained or are not in
effect. In order to enable Buyer
to conduct a due diligence
investigation, Seller and the
members of the Cross Pointe Group
shall provide Buyer (including its
employees and agents, and its
professional advisors) with the
right to conduct inspections, soil
test borings, soil tests, drainage
tests, surveys, topographical
analyses, engineering studies, and
investigations, together with
access to all environmental files,
licenses, permits, permit
applications, consultant reports,
notices from local, state, and
federal governmental entities,
environmental audit and inspection
reports, insurance files, and other
information, necessary for Buyer to
assess the environmental status of
the operating facilities of the
Cross Pointe Group. Buyer shall
provide Seller with a copy of all
reports prepared in the course of
such investigations.
(i) Resignations. Seller shall
have delivered to Buyer
resignations, effective as of the
Closing, from each director of a
member of the Cross Pointe Group
and from each executive officer of
a member of the Cross Pointe Group
who is also an employee of Seller
or who is so serving as a
representative of Seller.
(j) Employment Agreements. The
employees upon whom Seller and
Buyer agree shall have entered into
employment agreements with members
of Cross Pointe Group, in form and
substance satisfactory to Buyer.
11. Conditions Precedent to
Obligations of Seller. The
obligations of Seller hereunder
(unless expressly waived by Seller)
are subject to fulfillment by
Buyer, prior to or at Closing, as
the case may be, of each of the
following conditions:
(a) No Material Errors; Performance
of Obligations. The
representations and warranties of
the Buyer herein shall, in the
aggregate, be true and correct in
all material respects as of the
Closing Date. Buyer shall have
performed in all material respects
all of the obligations to be
performed by it hereunder in the
time and manner herein stated.
(b) Certified Copy of Resolutions.
Buyer shall have delivered to
Seller a certified copy of
resolutions adopted by the Board of
Directors of Buyer authorizing the
execution and delivery of this
Agreement and the consummation of
the transactions contemplated
hereby.
(c) Opinion of Buyer's Counsel.
Buyer shall have delivered to the
Seller the opinion of its counsel,
dated as of the Closing Date,
substantially in the form of
Schedule 11(c).
(d) Injunctions. No injunctions
shall have issued restricting or
prohibiting the transactions
contemplated by this Agreement.
(e) Clayton Act Matters. The
waiting period required by
Section 7A of the Clayton Act shall
have expired or been terminated.
(f) Other Matters. All corporate
and other proceedings and actions
taken in connection with the
transactions contemplated hereby
and all certificates, opinions,
agreements, instruments and
documents mentioned herein or
incident to any such transaction
shall be delivered to Seller and be
reasonably satisfactory in form and
substance to Seller and its
counsel.
(g) Promissory Note. Buyer shall
have executed and delivered to
Seller a Promissory Note, in
substantially the form of
Exhibit D, evidencing Buyer's
obligation to pay Seller the second
installment of the Purchase Price.
12. Broker. Seller represents and
warrants that CS First Boston was
retained by Seller to represent it
in this transaction. Buyer
represents and warrants that
Donaldson, Lufkin & Jenrette
Securities Corporation has been
retained by Buyer to represent it
in this transaction. Seller shall
be responsible for payment of all
fees and expenses of CS First
Boston and Buyer shall be
responsible for all fees and
expenses of Donaldson, Lufkin &
Jenrette Securities Corporation.
Should any claims for commissions
be made by any other person
claiming an interest in this
Agreement, or in the underlying
transactions, by reason of any
agreement, understanding or other
arrangement with Buyer or with
Seller, or their respective agents,
servants, employees, or other
representatives, then the party
through, or on account of, whom
such claims are made shall
indemnify and hold harmless the
other party from any and all
liabilities and expenses in
connection therewith in accordance
with the provisions of Section 15
below. The foregoing provisions of
this Section 12 shall survive not
only the Closing hereunder, but
also any termination or
cancellation of this Agreement.
13. Employees and Employee
Benefits. Following the Closing,
the members of the Cross Pointe
Group shall continue employment of
substantially all of their
respective employees at their
current pay and on terms and
initially with benefits which will
in the aggregate be reasonably
comparable to their present terms
of employment. Seller and the
members of the Cross Pointe Group
agree to use all reasonable efforts
consistent with prior practices to
keep the present employees of the
members of the Cross Pointe Group
during the period between the
execution hereof and the Closing
Date. Nothing in this Agreement
shall be deemed for the benefit of,
or enforceable by or on behalf of,
any labor union or by any employee
or former employee of any member of
the Cross Pointe Group, or any
dependent or beneficiary of any
such employee or former employee,
and nothing in this Agreement shall
abrogate the rights of any member
of the Cross Pointe Group from
modifying, amending, or terminating
the benefits under any plan or
arrangement in accordance with the
terms of such plan or arrangement.
Schedule 13, the Agreement
Regarding Employee Benefits between
Buyer, Cross Pointe and Seller, is
by this reference incorporated into
this Agreement in full.
14. Confidential Information.
(a) Buyer's Duty. Buyer
acknowledges that pursuant to its
right to inspect Seller's records
and facilities under Section 9(a),
Buyer shall become privy to
Confidential Information. Buyer
agrees that in the event the
transaction contemplated by this
Agreement is not completed, all
Confidential Information disclosed
to Buyer shall be treated in the
same manner as "Evaluation
Material" is treated in the
Confidentiality Letter. The
confidentiality and nonuse
provisions hereof shall survive any
termination of this Agreement. The
Confidentiality Letter shall
continue in full force and effect
for the duration of its term in
addition to the provisions of this
Section 14.
(b) Seller's Duty. Seller
acknowledges that it is privy to
confidential information and
materials concerning the Cross
Pointe Group and has furnished such
information and materials to other
potential buyers subject to
confidentiality agreements. Seller
agrees not to disclose the
information or materials to any
other person and, at the reasonable
request of Buyer, shall enforce its
rights under such confidentiality
agreements, including its right to
have such materials returned or
destroyed.
15. Indemnification.
(a) Seller's Indemnity. Without
limiting any remedy Buyer may have
hereunder, Seller hereby agrees to
indemnify, defend and hold Buyer
harmless from and against and in
respect of any and all liabilities,
losses, damages, claims, costs and
expenses, including reasonable
attorneys fees and expenses, (all
on an after-tax basis) suffered or
incurred by Buyer or any member of
the Cross Pointe Group when so
suffered or incurred, by reason of
or relating to:
(i) any representation or
warranty by Seller contained
in this Agreement being
breached or untrue;
(ii) any covenant or agreement
of Seller contained in this
Agreement being breached or
not fulfilled, and not waived;
(iii) any economic harm (net of
taxes) incurred or payment
required to be made by any
member of the Cross Pointe
Group under the Flambeau Lease
with respect to events or
conditions occurring prior to
the Closing Date, including
any liability for tax
indemnification arising under
the Flambeau Lease prior to
the Closing Date;
(iv) any claim under Treas.
Reg. section 1.1502-6 by the Internal
Revenue Service against any
member of the Cross Pointe
Group as a member of Seller's
consolidated group prior to
the Closing Date with respect
to any federal income tax
liability of Seller for any
period ending on or prior to
December 31, 1995;
(v) the assertion against
Buyer of any liability of
Seller not assumed by Buyer
hereunder; or
(vi) the assertion against
Buyer or any member of the
Cross Pointe Group of any
liability, fixed or
contingent, that is not
reflected in the Statement of
Net Book Value or Schedule
7(d);
provided, however, that
indemnification for Environmental
Costs shall be dealt with solely in
accordance with Section 18 hereof.
(b) Buyer's Indemnity. Without
limiting any remedy Seller may have
hereunder, Buyer hereby agrees to
indemnify, defend, and hold Seller
harmless from and against and in
respect of any and all liabilities,
losses, damages, claims, costs and
expenses, including reasonable
attorneys fees and expenses, (all
on an after-tax basis) by reason of
or relating to:
(i) any representation or
warranty by Buyer contained in
this Agreement being breached
or untrue;
(ii) any covenant or agreement
of Buyer contained in this
Agreement being breached or
not fulfilled, and not waived;
or
(iii) the failure of Buyer to
pay, discharge, or perform any
guaranty, obligation or
liability assumed by Buyer
hereunder, including without
limitation the Guaranteed
Obligations.
(c) Notice of Claims. Notice of
any claim for indemnification under
this Agreement (other than for
claims pursuant to Section 16 and
18), shall be effective only if
such notice shall have been given
in writing to the Indemnitor on or
prior to the 90th day following the
expiration of the applicable
representation, warranty, covenant,
or agreement. Notice of claims by
the Seller against the Buyer
regarding Guaranteed Obligations
shall be effective only if given in
writing on or prior to the date 90
days following the date on which
the liability of Seller is
discharged with respect to the last
outstanding Guaranteed Obligation.
(d) Limitations on Claims Amounts.
The first $500,000 of any aggregate
claims or related claims made by
either party (except claims against
Seller pursuant to subparagraphs
(a) (iii), (iv), and (v) above,
claims against Buyer under
subparagraph (b) (iii) above or
Section 4 hereof, or claims against
either Buyer or Seller under
Sections 9(b), 9(c), 12, 14, or 16
hereof) pursuant to this Section
shall be borne by that party and
shall not be indemnifiable. The
minimum amount of each such claim
shall be $50,000. Seller and Buyer
specifically agree that the total
amount of indemnification payable
by Seller pursuant to Section 15
and Section 18 together shall not
exceed the amount of the purchase
price paid to Seller in cash
hereunder.
(e) Effect of Materiality
Qualifications. For purposes of
determining whether Buyer or Seller
is entitled to indemnification
under Section 15(a) or 15(b), and
whether the amount of any claim is
$50,000 or the aggregate amount of
all claims exceeds $500,000 for
purposes of Section 15(d),
qualifications as to materiality in
individual representations and
warranties shall be disregarded.
(f) General Claims Procedures. In
the event that indemnification is
sought with respect to any
obligation of Buyer or Seller under
this Agreement (other than under
Section 18 hereof) which has
resulted in litigation between the
obligee thereof and Buyer or
Seller, as the case may be, the
party seeking indemnification (the
"Indemnitee") shall give the party
from whom indemnification is sought
(the "Indemnitor") notice of any
claim of the commencement of any
action or proceeding promptly after
the Indemnitee receives notice
thereof, and shall permit the
Indemnitor to assume the defense of
any such claim or litigation
resulting from such claim.
If the Indemnitor assumes the
defense of any such claim or
litigation resulting therefrom, the
obligations of Indemnitor as to
such claim shall be limited to
taking all steps necessary in the
defense or settlement of such claim
or litigation resulting therefrom
and to holding the Indemnitee
harmless from and against any and
all losses, damages, and
liabilities caused by or arising
out of any settlement approved by
the Indemnitor or any judgment in
connection with such claim or
litigation resulting therefrom.
The Indemnitee may participate, at
its expense, in the defense of any
such claim or litigation, provided
that the Indemnitor shall direct
and control the defense of such
claim or litigation. Regardless of
which party shall assume the
defense of a claim or litigation,
the parties agree to cooperate
fully with one another in
connection therewith and to conduct
such defense in a manner that is
reasonable to the interests of the
Indemnitee, and the parties hereto
agree to consult with one another
as to the progress and status of
each such claim or litigation.
Except with the written consent of
the Indemnitee, the Indemnitor
shall not, in the defense of such
claim or any litigation resulting
therefrom, consent to entry of any
judgment or enter into any
settlement which does not include
as an unconditional term thereof,
the giving by the claimant or the
plaintiff to the Indemnitee of a
release from all liability with
respect to the claim or litigation.
No such consent judgment or
settlement shall have any
continuing effect upon the business
or financial position of the
Indemnitee without the prior
written consent of the Indemnitee.
If the Indemnitor shall not assume
the defense of any such claim or
litigation resulting therefrom, the
Indemnitee may defend against such
claim or litigation in such manner
as it may deem appropriate, and,
unless the Indemnitor shall deposit
with the Indemnitee a sum
equivalent to the total amount
demanded in such claim or
litigation, or shall deliver to
Indemnitee a surety bond for such
amount in form and substance
reasonably satisfactory to
Indemnitee, Indemnitee may settle
such claim or litigation on such
terms as it may reasonably deem
appropriate, and the Indemnitor
shall promptly reimburse Indemnitee
for the amount of all costs and
expenses, legal or otherwise,
reasonably incurred by the
Indemnitee in connection with the
defense against or settlement of
such claims or litigation. If no
settlement of such claim or
litigation is made, the Indemnitor
shall promptly reimburse the
Indemnitee for the amount of any
final judgment rendered with
respect to such claim or in such
litigation and for all reasonable
costs and expenses, legal or
otherwise, incurred by the
Indemnitee in the defense against
such claim or litigation, but only
to the extent that such amounts are
actually paid.
16. Lease Guarantees. In the
event that Seller's release from
the Guaranteed Obligations listed
on Schedule 1(z) is not obtained,
Seller and Buyer agree that they
will continue to use their best
efforts to obtain the complete
release of Seller from the
Guaranteed Obligations.
Notwithstanding the foregoing,
Buyer shall indemnify Seller
against any payments made by Seller
to cure any default by Buyer or any
member of the Cross Pointe Group
under the Guaranteed Obligations,
and against all other demands,
payments, expenses and costs
incurred by Seller with Buyer's
prior approval, which shall not be
unreasonably withheld, in
connection with such Guaranteed
Obligations in accordance with
Section 15 hereof, for so long as
Seller has any potential liability
under any such Guaranteed
Obligation. Buyer and Seller agree
that the provisions of this
Section 16 shall continue in full
force and effect until complete
discharge of Seller and payment in
full by Buyer of such Guaranteed
Obligations.
17. Expenses. Seller and Buyer
shall each be responsible for all of
their own expenses incurred in
connection with the transactions
contemplated hereby.
18. Hazardous Material Indemnity.
(a) Indemnity. Subject to the
provisions of paragraph (b) below,
Seller shall indemnify and hold
Buyer and each member of the Cross
Pointe Group harmless from and
against any and all Environmental
Costs paid, incurred, or suffered
by Buyer or any member of the Cross
Pointe Group.
(b) Amounts Subject to Indemnity.
This Section 18 provides to Buyer,
the respective Cross Pointe Group
members, and anyone claiming under
or through them the exclusive
remedy with respect to any
Environmental Condition. Except
for those Environmental Conditions
specified in subparagraph (i)
below, as to which there shall be
no limitation period with respect
to Seller's obligation to indemnify
hereunder, such exclusive remedy
shall lapse and be of no further
force or effect on and after the
tenth anniversary of the Closing
Date.
(i) Seller shall indemnify Buyer
for the full amount of
Environmental Costs with respect to
each of the following Environmental
Conditions:
1. Contamination, if any, of
the Flambeau River and its
sediments.
2. Contamination, if any, at
the old Flambeau spent sulfite
liquor lagoon area, including
any associated soil and
groundwater contamination.
3. Contamination, if any, at
the spent sulfite liquor
lagoon currently being used
for storage by Flambeau Paper,
including any associated soil
and groundwater contamination.
4. Contamination, if any, at
the North Woodyard site,
including any associated soil
and groundwater contamination.
5. Contamination, if any, at
Miami Paper's landfill site,
including any associated soil
and groundwater contamination.
6. Closure of any cell of
the Miami Paper landfill site
other than in the ordinary
course of business.
7. Fines, penalties, or
other claims by third parties
with respect to events that
occur or Environmental
Conditions that exist on or
before the Closing Date,
including claims that any
member of the Cross Pointe
Group is a potentially
responsible party for the
remediation of any site and
other claims under the
Comprehensive Environmental
Response, Compensation and
Liability Act, as amended, or
similar law.
(ii) With respect to each category
of Environmental Conditions set
forth in Schedule 18(b) known to
Buyer as of the Closing Date,
including conditions identified in
Schedule 10(h) and conditions
identified in the course of the
investigations performed or
obtained by Buyer under Section
10(h), Seller shall indemnify Buyer
for the following portions of the
Environmental Costs associated with
each of the 12 separate categories:
1. None of the first $50,000
of the Environmental Costs,
subject to the provisions of
subparagraph (v) of this
Section 18(b).
2. 50% of the Environmental
Costs in excess of $50,000 up
to and including $250,000.
3. 75% of the Environmental
Costs in excess of $250,000 up
to and including $1,000,000.
4. 80% of the Environmental
Costs in excess of $1,000,000
up to and including
$2,000,000.
5. 100% of the Environmental
Costs in excess of $2 million.
(iii) Seller shall indemnify
Buyer for the full amount of
Environmental Costs with respect to
each Unknown Condition after the
first $50,000 for each category of
Environmental Conditions listed in
Schedule 18(b), subject to the
provisions of subparagraph (v) of
this Section 18(b).
(iv) With respect to third-party
non-governmental claims for money
damages relating to Environmental
Conditions, the provisions of
Section 15(f) shall govern the
procedure for handling such claims
as between the parties hereto.
(v) In determining whether Buyer
has paid the first $50,000 of
Environmental Costs for each
category of Environmental
Conditions listed in Schedule
18(b), amounts paid by Buyer for
that category under subparagraphs
(ii) and (iii) of this Section
18(b) shall be aggregated so that
the total amount that Buyer is
required to pay with respect to the
first $50,000 of Environmental
Costs for that category does not
exceed $50,000.
Seller and Buyer specifically agree
that the total amount of
indemnification payable by Seller
pursuant to Sections 15 and 18
together shall not exceed the
amount of the purchase price.
(c) Environmental Claims
Procedures. Buyer will notify
Seller as soon as practicable after
it determines that Seller may be
liable for indemnification under
this Section 18. Within 60 days
after giving this notice, Buyer
will provide Seller with
information, in reasonable detail,
regarding the nature of the
condition, Buyer's proposed course
of action to remediate the
condition, and the estimated costs
thereof. Within 30 days after
receiving this information, Seller
must notify Buyer whether it agrees
with Buyer's proposed actions or,
if not, of Seller's proposed course
of action and the estimated costs
thereof. Buyer and Seller will
cooperate to find a mutually
satisfactory course of action to
remediate the condition; if they
are unable to do so within 30 days
after the notice by Seller referred
to in the preceding sentence,
either party may refer the matter
to arbitration in accordance with
Section 33. Each arbitrator
involved in any arbitration
proceeding with respect to any
Environmental Condition shall be an
experienced pulp and paper industry
environmental advisor.
(d) Standards for Environmental
Actions. Remediation and other
actions with respect to
Environmental Conditions for which
indemnification is sought under
this Section 18 shall be (i)
designed to achieve compliance with
Environmental Laws, (ii) designed
to reduce or eliminate an
unreasonable risk to human health
or the environment, taking into
account all relevant factors,
including the current use of the
property to be remediated, or (iii)
designed by Buyer in its good faith
business judgment (exercised
without regard to the availability
of indemnification hereunder) and,
in each case, effected in the
manner that is least disruptive to
the operations of the Cross Pointe
Group. To the extent that any
Environmental Condition has been
materially exacerbated or the
Environmental Costs materially
increased by any acts, or
unreasonable failures to act
(excluding the mere passage of
time), of Buyer following the
Closing Date, Buyer shall be
responsible for Environmental Costs
attributable to such act or failure
to act.
(e) Changes in Environmental Laws.
Except for those matters listed in
Section 18(b)(i) and (iii), if any
liability or obligation under
Section 18(b)(ii) arises as a
result of any change in any
Environmental Law after the
Closing, Seller shall not be
required to assume or indemnify
Buyer for such liability or
obligation to the extent such
change in law affects any site,
operation, or equipment which is
used by any member of the Cross
Pointe Group in the ordinary course
of its operations on the Closing
Date.
(f) Post-Closing Investigations.
After the Closing, Buyer will not
arrange or conduct investigations
of any Environmental Condition
other than (i) as required by
applicable law, (ii) in the
exercise of good faith business
judgment (exercised without regard
to the availability of
indemnification hereunder), (iii)
in connection with the
investigation of a third party
claim, (iv) arising out of Buyer's
environmental management system
review, or (v) in the ordinary
course of Buyer's operations. Any
breach of this covenant may be
taken into account in any
arbitration proceeding involving
Environmental Costs with respect to
any Environmental Condition arising
out of such discovery.
(g) Emergency Actions.
Notwithstanding the foregoing,
Buyer may take immediate action to
the extent necessary to protect the
health and safety, to avoid the
payment of significant fines or
penalties, to avoid a significant
increase in remediation costs, or
to enable Buyer to continue the
operations of the Cross Pointe
Group in an uninterrupted manner.
19. Termination of Agreement.
This Agreement may be terminated
upon ten (10) business days prior
written notice at any time prior to
Closing without liability of either
party to the other:
(i) by mutual consent of the
Seller and Buyer;
(ii) by Buyer, if notice of a
development that has a Material
Adverse Effect has been given, in
accordance with Section 9(a)(vii)
hereof;
(iii) by Buyer, if Closing has
not occurred on or before June 30,
1995 as a result of the
nonfulfillment of any of the
conditions to Buyer's obligation to
perform contained in Section 10 of
this Agreement;
(iv) by Buyer, if any environmental
matter is discovered not listed on
Schedule 10(h) or Buyer determines
that any environmental matter has a
Material Adverse Effect;
(v) by Seller, if notice of a
development that has a material
adverse effect with respect to the
Buyer has been given, in accordance
with Section 9(a)(vii) hereof;
(vi) by Seller, if Closing has not
occurred on or before June 30, 1995
as a result of the nonfulfillment
of any of the conditions to
Seller's obligation to perform
contained in Section 11 of this
Agreement; and
(vii) by either party, if Closing
has not occurred on or before
September 30, 1995 for any reason,
provided that the delay in Closing
has not been caused by a
misrepresentation, breach of
warranty, or failure to perform any
obligation under this Agreement by
the party terminating the
Agreement.
This Agreement may also be
terminated by any party upon ten
(10) business days prior written
notice if the nonterminating party
has breached any covenant to be
performed by it pursuant hereto.
In such event, the terminating
party shall have the right to
receive, as damages for such
breach, reimbursement of all
expenses incurred by it in
connection with the transactions
contemplated in this Agreement.
Neither party shall be liable for,
and no party may recover,
consequential or punitive damages
as a result of, the termination of
this Agreement. Termination of
this Agreement shall not affect in
any way the continuing obligations
of the parties hereto pursuant to
Section 12 relating to brokers and
Section 14 hereof relating to the
treatment of Confidential
Information.
20. Announcements. Buyer and
Seller shall cooperate in the
preparation of any announcements
regarding the transactions
contemplated by this Agreement.
Neither party shall issue any
announcement regarding the
transactions contemplated hereby
without the prior consent of the
other party, which consent shall
not be unreasonably withheld. The
covenants set forth in this Section
20 shall be enforceable in law or
at equity by either party.
21. Records. After the Closing
Date, Buyer shall retain the books,
records and data of Cross Pointe
existing at the Closing Date for a
period of ten (10) years; except
that, Buyer may dispose of any such
books, records or data before the
end of such ten year period if (a)
Buyer notifies Seller of its
intention to dispose of the books,
records or data and (b) Seller does
not, at its expense, remove such
books, records, or data within 30
days after such notice is given. A
list describing the books, records
and data to be transferred to Buyer
shall be delivered to Buyer prior
to Closing. During the retention
period specified above, Seller
shall be entitled to access, at
times reasonably convenient to
Buyer, to such books, records and
data in connection with the
preparation or handling of Seller's
tax returns, financial reports, tax
audits, W-2 forms, litigation
matters or any other reasonable
need of Seller.
22. Assistance after Closing.
Buyer shall furnish, at no cost to
Seller, such assistance to Seller
in the preparation of its fiscal
1994 year-end financial and tax
reports and interim 1995 financial
and tax reports as Seller may
reasonably request. All such
assistance shall be on a
confidential basis, and Seller
agrees to comply with the
confidentiality and limitation on
use provisions of Section 14 hereof
with respect to such Confidential
Information as though such
provisions applied equally to it.
(a) Retained Liabilities. Buyer
shall also provide Seller with
reasonable assistance, including
without limitation furnishing of
documents and making available to
Seller potential witnesses within
its control or that of any member
of the Cross Pointe Group and the
assistance of its or Cross Pointe's
engineers or experts, in the
defense of any claim, lawsuit, or
tax examination arising out of the
operations of the members of the
Cross Pointe Group prior to the
Closing Date for which Seller
retains liability under this
Agreement. Seller shall provide
Buyer and any member of the Cross
Pointe Group with corresponding
reasonable assistance in the
defense of any claim, lawsuit, or
tax examination for which Buyer or
any member of the Cross Pointe
Group has liability after Closing.
Each party shall reimburse the
other and any member of the Cross
Pointe Group for its out of pocket
expenses incurred in providing such
assistance.
(b) Allocation of Pulp. Seller
and Buyer shall take all necessary
action to transfer all contracts
for purchase of kraft pulp
currently in the name of Seller and
allocated to members of the Cross
Pointe Group into the name of Cross
Pointe or Buyer, as Buyer may
direct; or in the event such
contracts are not assignable,
Seller and Buyer shall cooperate to
cancel such contracts at the
earliest possible time. Until such
contracts are transferred or
terminated, Seller shall continue
to perform such contracts and
direct delivery of pulp thereunder
to such members of the Cross Pointe
Group in the same manner as
currently performed, and Cross
Pointe shall pay for such kraft
pulp delivered to the seller
thereof, or if Seller has paid
therefor, promptly to Seller upon
delivery.
23. Tax Matters.
(a) Apportionment of Income.
Seller will include the income of
the Cross Pointe Group (including
any deferred income and any excess
loss accounts pursuant to relevant
rules and regulations of the
Internal Revenue Service) on the
Seller's consolidated federal Tax
Returns for all periods through the
Closing Date and pay any federal
income taxes attributable to such
income. Cross Pointe will furnish
all tax information requested by
Seller to it for inclusion in
Seller's federal consolidated Tax
Return for the period which
includes the Closing Date in
accordance with Seller's past
custom and practice. The income of
the Cross Pointe Group will be
apportioned to the period up to and
including the Closing Date and the
period after the Closing Date by
closing the books of the Cross
Pointe Group as of the end of the
Closing Date.
(b) Audits. Seller will allow
Cross Pointe and its counsel (at
Cross Pointe's expense) to be
represented during any audits of
Seller's consolidated federal Tax
Returns to the extent that disputed
items therein affect the federal
income tax liability of the Cross
Pointe Group after the Closing
Date. Buyer will allow Seller and
its counsel (at Seller's expense)
to be represented during any audits
of the federal Tax Returns of the
Cross Point Group to the extent
that disputed items therein affect
the federal income tax liability of
the Cross Pointe Group prior to the
Closing Date.
(c) Post-Closing Elections. At
Seller's reasonable request, the
Buyer will cause members of the
Cross Pointe Group to make or join
with Seller in making any election
relating to income taxes for the
year in which the Closing Date
occurs, so long as the making of
such election does not have an
adverse impact on the Buyer or the
Cross Pointe Group for any post-acquisition tax period.
(d) Section 338(h)(10) Election.
Seller will join with the Buyer in
making an election under Internal
Revenue Code Section 338(h)(10)
(and any corresponding elections
under state, local, or foreign tax
law) (collectively a
"Section 338(h)(10) Election") with
respect to the purchase and sale of
the stock of Cross Pointe and of
the members of the Cross Pointe
Group hereunder. Seller will pay
any tax attributable to the making
of the Section 338(h)(10) Election
and will indemnify the Buyer and
the members of the Cross Pointe
Group against any adverse
consequences arising out of any
failure to pay such tax. Seller
will also pay any state, local, or
foreign tax (and indemnify the
Buyer and the members of the Cross
Pointe Group against any adverse
consequences arising out of any
failure to pay such tax)
attributable to an election under
state, local, or foreign law
similar to the election available
under Internal Revenue Code
Section 338(g) (or which results
from the making of an election
under Internal Revenue Code
Section 338(g)) with respect to the
purchase and sale of the stock of
Cross Pointe and of the members of
the Cross Pointe Group hereunder
where the state, local, or foreign
tax jurisdiction (i) does not
provide or recognize a
Section 338(h)(10) election or
(ii) does not apply its provisions
corresponding to Internal Revenue
Code Section 338(h)(10) to the
purchase and sale of stock of Cross
Pointe (for example, because Cross
Pointe files a separate company tax
return in such jurisdiction);
provided, however, Seller's
obligation under this sentence
shall be limited to state, local,
or foreign income taxes
attributable to such election or
deemed election, Seller shall have
no obligation to pay such state,
local, or foreign income taxes
before they are otherwise due
(without penalty) under applicable
law, and Buyer shall take all
reasonable steps necessary to
minimize the amount of such state,
local, or foreign income taxes, but
only to the extent such actions or
steps are otherwise consistent with
the terms and provisions of this
Agreement (including, without
limitation, the Allocation schedule
referred to in Section 23(e)).
(e) Allocation of Purchase Price.
Buyer and Seller agree that the
Purchase Price and the liabilities
of Cross Pointe and other members
of the Cross Pointe Group (plus
other relevant items) will be
allocated to the assets of Cross
Pointe and other members of the
Cross Pointe Group for all purposes
(including tax and financial
accounting purposes) in a manner
consistent with the Allocation
Schedule attached hereto as
Schedule 23(e) after taking into
account any Purchase Price
Adjustment pursuant to Section
3(e). Buyer, members of the Cross
Pointe Group, and Seller will file
all tax returns (including amended
returns and claims for refund) and
information reports in a manner
consistent with such values.
24. Survival of Representations
and Warranties. Unless otherwise
expressly stated herein, all
representations and warranties of
the Seller and Buyer shall survive
the Closing for a period of two (2)
years; except that all the
representations and warranties
contained in Sections 7(a), 7(b),
7(c), 7(g), 7(h), and 7(u) and
Section 8 shall survive the Closing
for a period of ten (10) years; and
the representations and warranties
contained in Section 7(t) shall
survive the Closing until the
expiration of the applicable
statutes of limitation (including
extensions).
25. Amendment and Waiver. This
Agreement may not be amended or
modified at any time or in any
respect other than by an instrument
in writing executed by Buyer and
Seller.
26. Notices. Any notice or
communication provided for in this
Agreement shall be in writing and
shall be deemed given when
delivered personally or by
electronic facsimile transmission,
against receipt, or when deposited
in the United States mail,
registered or certified mail,
return receipt requested to the
following address:
(a) If to Seller:
Pentair, Inc.
1500 County Road B2 West
St. Paul,Minnesota 55113-3105
Attention: Ronald V. Kelly
Facsimile: (612) 639-5209
with a copy to:
Henson & Efron, P.A.
1200 Title Insurance Building
400 Second Avenue South
Minneapolis, Minnesota 55401
Attention: Louis L. Ainsworth, Esq.
Facsimile: (612) 339-6364
(b) If to Buyer:
Noranda Forest Inc.
Suite 4414, Box 7
Toronto-Dominion Bank Tower
Toronto, Ontario M5K 1A1
Attention: Thomas G. Stinson
Facsimile: (416) 982-7396
with a copy to:
Thompson, Hine and Flory
1100 National City Bank Building
Cleveland, Ohio 44114-3070
Attention: Donald H. Messinger, Esq.
Facsimile: (216) 566-5571
Any party may change the above
address for notice by written
notice to the other parties in
accordance with the provisions of
this Section 26.
27. Parties in Interest. All of
the terms and provisions of this
Agreement shall be binding upon and
inure to the benefit of and be
enforceable by Seller and Buyer,
their respective successors and
permitted assigns. Neither party
may assign this Agreement without
the express written consent of the
other party, except that Buyer may
assign this Agreement to an
affiliate of Buyer provided that no
such assignment shall relieve Buyer
of its obligations hereunder. This
Agreement shall not confer any
rights or remedies upon any person
other than the Buyer and Seller and
their respective successors and
permitted assigns.
28. Further Assurances. Each
party shall from time to time
execute and deliver such further
documents and do such further acts
as the other party may reasonably
require for carrying out the
purposes and intent of this
Agreement.
29. No Waivers. No failure of
either party to this Agreement to
pursue any remedy resulting from a
breach of this Agreement shall be
construed as a waiver of that
breach or as a waiver of any
subsequent or other breach.
30. Governing Law. This Agreement
shall be construed in accordance
with and governed by the
substantive laws of the State of
Minnesota without giving effect to
the choice of law provisions
thereof. This Agreement shall be
subject to the non-exclusive
jurisdiction of the courts of, and
United States federal courts
sitting in, the State of Minnesota,
and all parties hereby irrevocably
submit to the jurisdiction of such
courts with respect to any claim
arising out of this Agreement.
31. Severability. Should any
provision of this Agreement be or
become invalid in whole or in part
or be incapable of performance for
whatever reason, then the validity
of the remaining provisions of this
Agreement shall not be affected
thereby. In such event, the
parties hereby undertake to
substitute for any such invalid
provision or for any provision
incapable of performance, a
provision which corresponds to the
spirit and purpose of such invalid
or unperformable provision as far
as permitted under applicable law,
so as to provide to the parties to
the fullest extent possible the
economic purpose and effect of this
Agreement.
32. Miscellaneous. This Agreement
constitutes the entire agreement
between the parties and supersedes
all prior representations,
understandings or agreements
between them, written or oral,
respecting the within subject
matter. Headings are for
convenience only and are not
intended to alter any of the
provisions of this Agreement.
Words importing the singular number
include the plural and vice versa.
This Agreement may be signed in
multiple copies, each of which
shall be considered an original,
but all of which shall together
constitute one and the same
instrument.
33. Arbitration of Disputes.
Except as otherwise provided in
Section 3 hereof, any dispute
arising out of or in connection
with this Agreement, including any
question regarding its existence,
validly, interpretation, or
termination, that can not be
resolved amicably by the parties
shall be referred to and finally
resolved by binding arbitration,
under the auspices and the then
applicable Commercial Arbitration
Rules of the American Arbitration
Association as herein modified or
supplemented or otherwise agreed to
by the parties hereto. At any
time by express written agreement,
the parties may modify, limit the
application of, add to, or avoid
the operation of one or more rules
of such association. The
arbitrator or arbitrators shall be
selected in accordance with such
rules. The number of arbitrators
when the amount in dispute is
$500,000 or less shall be one, and
the number of arbitrators when the
amount in dispute is more than
$500,000 shall be three. The
location of the arbitration
proceedings shall be Chicago,
Illinois. The American Arbitration
Association shall arrange for a
prehearing conference as soon as
practicable after the appointment
of the arbitrators. At the
prehearing conference, the
arbitrators shall set a hearing
date, which shall commence not
later than 60 days after the
prehearing conference.
The parties agree that the
arbitrators may call and question
any witness, including any expert
witness, and may require a party to
produce any relevant documents or
evidence prior to or at any
hearing. The parties and the
arbitrators shall proceed
expeditiously so that the arbitral
award is issued as soon as
practicable. The arbitrators will
be empowered to grant injunctive
relief in the form of interim
orders pending the outcome of the
arbitration and in the final
arbitral award. The costs,
expenses, and fees of a party
incurred in connection with any
arbitration proceeding shall be
borne by that party. Costs,
expenses, and fees of the
arbitration panel shall be borne
equally by Buyer and Seller, unless
the final arbitral award otherwise
provides.
The arbitral award will be the
exclusive remedy for all claims,
counterclaims, issues, or
accountings presented or pled to
the arbitrators. Any award may, in
the discretion of the arbitrators,
include interest from the date of
the breach or other violation of
the Agreement until the award is
fully paid. The parties hereto
irrevocably submit to the
jurisdiction of the courts of, and
United States federal courts
sitting in, the State of Minnesota,
for enforcement of the arbitral
award. Any additional costs, fees,
or expenses incurred in enforcing
the arbitral award will be charged
against the party that resists
enforcement.
IN WITNESS WHEREOF, each party has
caused this Agreement to be
executed by its authorized officer
as of the date first above written.
PENTAIR, INC.
By:
Its:
And:
Its:
NORANDA FOREST INC.
By:
Its:
And:
Its:
The undersigned consent to, and
agree to be bound by, the terms and
provisions of the foregoing
Agreement.
CROSS POINTE PAPER FLAMBEAU PAPER CORP.
CORPORATION
By:
By:
Its:
Its:
DAYTON PAPER CORP.
MIAMI PAPER CORP.
By:
By:
Its:
Its:
<PAGE>
EXHIBIT A
CONFIDENTIALITY LETTER DATED AUGUST 24,
1994
CS FIRST BOSTON
Mr. Thomas G. Stinson
Vice President - Corporate Planning
Noranda Forest Inc.
Suite 4414
Toronto-Dominion Centre
Toronto, Ontario M5K lA1
Dear Tom:
CS First Boston Corporation ("CS First
Boston") is acting on
behalf of Pentair, Inc. (the "Company")
to explore a possible sale
of the Company's paper businesses, Cross
Pointe Paper
Corporation (including its three
wholly-owned subsidiaries, Miami
Paper Corporation, Flambeau Paper
Corporation and Dayton
Paper Corporation), Niagara of Wisconsin
Paper Corporation and
the Company's 50 percent joint venture
ownership
interest in Lake Superior Paper
Industries (collectively the "Paper
Group" or the "Group"). In connection
with your analysis of a
purchase of the Paper Group, the
Company, through its
representatives, including CS First
Boston, will make available
to you certain Evaluation Material (as
defined below). As a
condition to receipt of the Evaluation
Material, you agree to the
provisions of this confidentiality
agreement, and you agree to
cause your employees, agents, affiliates
and advisors
(collectively, your "Representatives")
to comply with the
provisions hereof.
The term "Evaluation Material" shall
include all oral and written
information, including that contained in
the Information
Memorandum dated August 1994 provided to
you by the Company, its employees,
agents and advisors,
including CS First Boston, but does not
include any information
which you can document (I) at the time
of disclosure or thereafter
was generally available to and known by
the public (other
than as a result of a disclosure
directly or indirectly by you or your
Representatives), (ii) was available to
you on a non-confidential
basis from a source other than the
Company or its advisors,
provided that such source was not bound
by a confidentiality
agreement with the Company at the time
of disclosure, or (iii) has
been independently acquired or developed
by you without
violating any of your obligations under
this agreement.
(1) The Evaluation Material will be used
solely for the purpose of
evaluating a possible purchase of the
Paper Group. Unless and
until you have completed a purchase of
the Paper Group, you will
further keep all Evaluation Material
confidential, except that you
may disclose the Evaluation Material or
positions thereof to those
of your Representatives who need to know
such information for
the purpose of evaluating the possible
purchase of the Group.
You agree to be responsible for any
breach of this agreement by
your Representatives.
(2) In the event that you or any of your
Representatives become
legally compelled (by deposition,
interrogatory, request for
documents, subpoena, civil investigative
demand or civil process)
to disclose any of the Evaluation
Material, you shall provide the
Company with prompt written notice so
that the Company may
seek a protective order or other
appropriate remedy or waive
compliance with the terms of this
agreement. In any such event,
you agree to furnish only that portion
of the Evaluation Material
which you are advised by written opinion
of counsel is legally
required and to exercise your best
efforts to obtain assurances
that confidential treatment will be
accorded such Evaluation
Material.
(3) Upon the request of the Company at
any time, you will
promptly return to CS First Boston all
copies of the Evaluation
Material in the possession of you or
your Representatives, and
you will cause to be destroyed all
copies of any materials
containing or reflecting any Evaluation
Material.
(4) Without the prior written consent of
the Company, you will not,
and you will direct your Representatives
to not, disclose to any
third party either the fact that any
investigations, discussions or
negotiations are taking place concerning
a possible purchase of
the Paper Group or any of the terms,
conditions or other facts
with respect to any such possible
transaction, including the status
thereof.
(5) You agree that for a period of one
year from the date hereof,
you will not hire or solicit any Paper
Group employees with whom
you have had contact or who were
specifically identified to you
during the period of your investigation
of the Group, while they
are employed by the Group and for a
period of three months
thereafter.
(6) You understand and acknowledge that
neither the Company
nor CS First Boston is making any
representation or warranty,
express or implied, as to the accuracy
or completeness of the
Evaluation Material or any forecasts
included therein, and none
of the Company, CS First Boston, or any
of their respective
officers, directors, employees,
stockholders, owners, affiliates or
agents will have any liability to you or
any other person resulting
from your use of the Evaluation
Material. Only those
representations or warranties that are
made in a definitive
purchase agreement when,as and if
executed, and subject to
such limitations and restrictions as may
be specified in such
agreement, will have any legal effect.
(7)You agree that until the expiration
of three years from the date
of this agreement, you shall not,
whether acting alone or as a
member of a group (within the meaning of
Section 13(d)(3) of the
Securities Exchange Act of 1934),
without the prior approval of
the Board of Directors of the Company,
(I) in any manner acquire,
agree to acquire or make any proposal to
acquire, directly or
indirectly, any securities of the
Company, (ii) propose to enter
into, directly or indirectly, any merger
or business combination
involving the Company, (iii) make, or in
any way participate,
directly or indirectly, in any
solicitation of proxies to vote, or seek
to advise or influence any person with
respect to the voting of,
any voting securities of the Company, or
(iv) advise, assist or
encourage any third parties in
connection with any of the
foregoing.
(8) You acknowledge that no contract or
agreement providing for
the purchase of the Paper Group shall be
deemed to exist unless
and until a definitive purchase
agreement, expressly providing
that it is legally binding, has been
executed and delivered. You
further acknowledge that the Company and
CS First Boston shall
be free to conduct the process of any
sale of the Group as they
in their sole discretion shall determine
(including, without
limitation, negotiating with any
prospective party and entering into
a definitive agreement without prior
notice to you or any other
person) and that the sale process may be
changed at any time
without notice to you or any other
person.
(9) You agree that the Company shall be
entitled to equitable
relief, including injunction and
specific performance, in the event
of any breach of the provisions of this
agreement in addition to all
other remedies available to the Company
at law or in equity. You
also hereby irrevocably and
unconditionally consent to submit to
the exclusive jurisdiction of the courts
of the State of Minnesota
and of the federal district court for
the District of Minnesota with
respect to any actions, suits or
proceedings arising out of or
relating to this agreement and the
transactions contemplated
hereby (and you agree not to commence
any action, suit or
proceeding relating thereto except in
such courts).
(10) No provisions of this
confidentiality agreement shall be
waived or amended except in writing and
signed by the party
against whom such waiver or amendment is
sought to be
enforced. No failure or delay by the
Company in exercising any
right, power or privilege hereunder will
operate as a waiver
thereof, nor will any single or partial
exercise thereof preclude
any other or further exercise thereof or
the exercise of any other
right, power or privilege hereunder.
(11) This agreement is for the benefit
of the Company and CS
First Boston and their respective
successors and assigns and will
be governed by and construed in
accordance with the laws of the
State of Minnesota. Your obligations
under this agreement will
expire three years from the date of this
agreement and your
successors and assigns shall be bound by
all of the provisions
hereof.
If you agree with the foregoing, please
sign both copies of this
letter and return one copy, which will
constitute our agreement
with respect to the subject matter of
this letter.
Very truly yours,
Pentair Inc.
By CS First Boston on behalf of Pentair,
Inc.
By: Charles B. Edelstein
Title:Vice President
Confirmed and agreed to:
By.T. G. Stinson
Title: Secretary and Vice President
Corporate Planning
Date: August 25, 1994
<PAGE>
Exhibit B
REPORT ON STATEMENT OF NET BOOK VALUE
TO COMPLY WITH PURCHASE AGREEMENT
To the Board of Directors of Pentair,
Inc.
We have audited the accompanying
Statement of Net Book
Value of Cross Pointe Paper Corporation
and subsidiaries (the
"Company") as of March 31, 1995. This
Statement of Net Book
Value is the responsibility of the
Company's management. Our
responsibility is to express an opinion
on the Statement of Net
Book Value based on our audit.
We conducted our audit in accordance
with generally accepted
auditing standards. Those standards
require that we plan and
perform the audit to obtain reasonable
assurance whether the
Statement of Net Book Value is free of
material misstatement.
An audit includes examining, on a test
basis, evidence supporting
the amounts and disclosures in the
Statement of Net Book Value.
An audit also includes assessing the
accounting principles used
and significant estimates made by
management, as well as
evaluating the overall financial
statement presentation of the
Statement of Net Book Value. We believe
that our audit provides
a reasonable basis for our opinion.
The accompanying statement was prepared
to present the net
book value of the Company pursuant to
Section 3(b)(ii) of the
Agreement for Sale and Purchase of Stock
of Cross Pointe
Paper Corporation between Pentair, Inc.
and Noranda Forest Inc.
dated February 21, 1995 (the "Purchase
Agreement"), and is not
intended to be a complete presentation
of the Company s assets
and liabilities.
In our opinion, the accompanying
Statement of Net Book Value
presents fairly, in all material
respects, the Net Book Value of
Cross Pointe Paper Corporation and
subsidiaries as of March 31,
1995 pursuant to Section 3(b)(ii) of the
Purchase Agreement, in
accordance with the basis of accounting
described in Note 1 to
the Statement of Net Book Value.
This report is intended solely for the
information and use of the
Boards of Directors and management of
Pentair, Inc. and
Noranda Forest Inc. and should not be
used for any other
purpose.
Deloitte & Touche LLP
<PAGE>
EXHIBIT C
ASSUMED Liabilities
1. $10,850,000 Solid Waste Disposal
Revenue Refunding
Bonds Series 1992A dated 6/25/92
(Flambeau Paper Corp.
Project) "Flambeau Lease."
2. Lease and financing of railroad
equipment between Flambeau
Paper Corportion and Exchange National
Bank of Chicago as
Trustee under a Trust Agreement with
Portex Lease Corporation,
Portex Lease Corporation and The First
National Bank of
Chicago and Pentair, Inc., dated August
15, 1982 (lease of 48 rail
cars).
3. Maintenance Service Industrial
Space Lease, dated January
10, 1989 between LaSalle National Bank
and Cross Pointe Paper
Corporation concerning the premises
known as 1701 Hawthome
Lane, West Chicago, Illinois.
<PAGE>
Exhibit D
PROMISSORY NOTE
Minneapolis, Minnesota April, 1995
U.S. $100,000,000
For value received, NORANDA FOREST INC.
("Buyer") promises
to pay to or to the order of Pentair,
Inc. ("Seller") the principal
amount of one hundred million United
States Dollars (US
$100,000,000) on December 31, 1995. No
interest will accrue on
the Promissory Note unless Buyer
defaults in the payment of
principal when due; if Buyer defaults in
the payment of principal
when due, Buyer shall pay on demand
interest on overdue
principal at the announced large
business prime rate of Morgan
Guaranty Trust Company of New York plus
two percent (2%)
from December 31, 1995 to but not
including the date on which
principal is paid. Payment shall be made
in Mirmeapolis,
Minnesota by wire transfer to First Bank
National Association,
Account (ABA wire transfer routing
number 091000022), marked
to the attention of Karen Johnson, or to
such other account in the
United States and to the attention of
such other person as the
holder hereof may otherwise direct Buyer
in writing at least three
business days prior to the payrnent
date.
This Promissory Note is the promissory
note referred to in and
issued to Seller in accordance with the
provisions of Section 4 of
the Agreement for Sale and Purchase of
Stock of Cross Pointe
Paper Corporation between Seller and
Buyer dated February 21,
1995 (the "Agreement") and is subject
to, and the holder hereof is
entitled to the benefit of, the
provisions of the Agreement. Buyer's
obligation to pay this Promissory Note
is absolute and
unconditional, except that this
Promissory Note is subject to
set-off for nonpayment of arnounts that
(1) Seller agrees in
writing are owed by Seller to Buyer or
(2) have been deterrnined
to be owed by Seller to Buyer by an
arbitral award in accordance
with the Agreement. Buyer hereby waives
any further defenses
and rights of set-off, whether equitable
or legal in nature, that it
may otherwise be entitled to assert
against Seller with respect to
payment of the Promissory Note. All
payments to be made under
this Promissory Note shall be paid
without deduction for and free
from any taxes or withholdings of any
kind imposed upon Seller
by the Dominion of Canada or any
political subdivision thereof.
Buyer agrees to pay this Promissory Note
and, in the event of
default all cost of collection,
including reasonable attorneys fees,
and waives demand, presentment for
payment, notice of
dishonor, protest and notice of protest
and diligence in
collection and bringing of suit and
exonerates the holder hereof
from all duty and obligation to make
demand on anyone for
payment or to give notice to anyone of
nonpayrnent hereof and
consents to the extension, renewal,
exchange, surrender, or
release by the holder hereof. Buyer
agrees that the holder hereof
may extend the time of payment, accept
partial payment, take
security, or exchange or release any
collateral, without
discharging or releasing Buyers.
This Promissory Note will be governed by
and interpreted in
accordance with the laws of the State of
Minnesota and shall be
subject to the exclusive jurisdiction of
the courts of, and United
States federal courts sitting in, the
State of Minnesota, and
Buyer hereby irrevocably submits to the
jurisdiction of such courts
with respect to any claim arising
hereunder.
CORPORATE SEAL
NORANDA FOREST INC.
By:
Title:
And:
Title:
<PAGE>
Schedule 13
AGREEMENT REGARDING EMPLOYEE BENEFITS
THIS AGREEMENT is made this last day of
February, 1995
between Pentair, Inc. (hereinafter
"Seller"), Cross Pointe Paper
Corporation ("Cross Pointe") and Noranda
Forest Inc. (hereinafter
"Buyer") in connection with the
execution of the Stock Purchase
Agreement dated February 21, 1995
between Seller and Buyer.
(hereinafter "Agreement"). Capitalized
terms which are used
herein shall (unless otherwise defined
herein) have the meanings
ascribed to them in the Agreement.
1. Health and Welfare Benefit Plans.
(a) VEBA Plans. Seller or Cross Pointe
provides certain health
and welfare benefit plans listed on
Exhibit A to this Agreement,
including but not limited to
hospitalization, surgery, medical and
similar benefit plans, to current and
former employees of Cross
Pointe through the Pentair Inc.
Voluntary Employee Benefit Trust
or other arrangements administered or
funded by Seller. Seller
has accrued and will continue through
the Closing Date to accrue
for the costs of these benefits and to
pay for such benefits in the
normal course of its business. Buyer
obtains the benefit, as a
deduction from the Net Book Value of the
Stock, of the amount of
these accruals as of the Closing Date.
In consideration therefore,
Buyer agrees (I) to administer and pay
all claims pending on the
Closing Date either directly or through
a designated successor
plan to the VEBA, and (ii) to promptly
reimburse Seller for
any amount paid by it thereafter for any
claims relating to current
employees of Cross Pointe. Following
Closing, Seller shall have
no further liability or responsibility
for claims, benefit payments or
any costs or expenses arising out of or
with respect to such
plans.
(b) Insured Plans. To the extent that
other health and welfare
benefit plans for current employees of
Cross Pointe are funded
by, or provided coverage under,
insurance policies owned by
Seller, Seller and Buyer shall use their
best efforts to transfer
such policies to Buyer or Cross Pointe,
as Buyer may direct. If
transfer of entire policies cannot be
accomplished, or if such
policies cover employees of Seller's
affiliates other than solely
those of Cross Pointe. Seller and Buyer
shall use their best
efforts to acquire new policies
providing such benefits, to the
extent available, for Buyer, with the
cost thereof to be born by
Buyer. Any established reserves
allocable to Cross Pointe under
any policies replaced pursuant to this
subsection (b) shall be
credited to Cross Pointe under new
policies or, to the extent
Seller receives the benefit thereof,
shall be paid to or for the
benefit of Cross Pointe by Seller. In
the event any Cross Pointe
employees are eligible to receive
long-term disability benefits at
Closing, Cross Pointe agrees to continue
responsibility for the
uninsured portion of these benefits.
(c)Postretirement Benefits. Seller will
assume responsibility for
Postretirement benefits. including
retiree medical and life
insurance. for all employees of Cross
Pointe who retire on or
before the Closing Date. Cross Pointe
will retain responsibility for
Postretirement benefits for active
employees of Cross Pointe
after the Closing Date. The amount of
the liability for
Postretirement benefits to be shown in
the Statement of Net
Book Value will equal the APBO for
Postretirement benefits
for active employees of Cross Pointe as
of the Closing Date
calculated on the same basis as the APBO
for active employees
of Cross Pointe included in Seller s
financial statements as of
December 31, 1994.
2. Employee Savings Plans.
(a) Salaried Employees' 401(k) Plan. As
soon as possible after
the Closing Date but no later than three
months after the Closing
Date, Buyer shall establish or otherwise
make available a
tax-qualified retirement plan and trust
(or other qualified funding
arrangement) for salaried employees of
Cross Pointe who are
eligible to participate in the Pentair.
Inc. Retirement Savings and
Stock Incentive Plan (the "RSIP Plus")
on the Closing Date. Such
plan shall contain a salary reduction
arrangement qualified under
401(k) of the Internal Revenue Code of
1986 (the "Code") and
other features reasonably comparable IO
the RSIP Plus including
an obligation on the part of the Buyer
to match. in cash a portion
of the salary reduction contributions
made by eligible participants
under the Buyers plan. Such plan shall
accept transfers or
rollovers as requested by eligible
participants pursuant to the
provisions of Code Section 402(c). Such
comparable plan need
not include an employer stock component
or provide for the
employer contribution with respect
thereto.
(b) Payment of Balances. As soon as
possible after the Closing
Dale bul no later than three months
after the Closing Date. Seller
shall transfer to the new plan(s)
established by Buyer or Cross
Pointe the accumulated balances held in
the RSIP Plus;
and the Represented Plan for the benefit
of Cross Pointe's
employees to the elect such transfer is
requested by the
individual participant and the Seller
may do so without
disqualification under the Code of the
RSIP Plus. The
Represented Plan or the replacement
plans to be established or
otherwise made available by Buyer or
Cross Pointe. Upon the
making of such payments, Seller shall
have no further obligation
or liability to Buyer, Cross Pointe or
the electing participants with
respect to the administration of the
plan(s), payment of benefits
thereunder, investment of funds or
otherwise.
3. Pension Plans.
(a) As soon as possible after the
Closing Date but no later than
three months after the Closing Date,
Buyer shall establish or
otherwise make available, a tax
qualified pension plan and trust
(or other qualified funding arrangement)
for covered employees
of Cross Pointe ("New Cross Pointe
Plan"). The new Cross
Pointe Plan shall be reasonably
comparable to the existing
Pentair, Inc. Pension Plan. Seller shall
cause the fiduciary of the
Pentair, Inc. Pension Plan to transfer
to the new Cross Pointe
Plan assets (calculated by using the
value of projected benefits
as of the Closing Date, using a salary
growth assumption of 3
percent and a covered compensation
growth assumption of 2 1/2
percent, using current service, based on
an interest rate at 8 1/2
percent, and using the other assumptions
used in calculating the
pension liability in Pentair. Inc.
Financial Statements as of
December 31, 1994, subject to the
minimum transfer
requirements of Section 414(1) of the
Code), liabilities and the
sole responsibility for payment to the
affected participants of
pension benefits. The transferred
assets shall include interest at
the rate of 8-1/2% from the Closing Date
to the date of transfer.
The new Cross Pointe Plan shall credit
all participation, benefit
and vesting service earned under the
Pentair, Inc. Pension Plan
as of the Closing Date.
(b) The existing Pension Plan for
Bargaining Employees of
Flambeau Paper Corp. (the "Flambeau
Plan") established and
maintained by Cross Pointe in accordance
with the existing
collective bargaining agreements shall
continue in full force and
effect as a plan to be sponsored by
Buyer. As soon as possible
after the Closing Date, but no later
than five months after the
Closing Date Buyer shall establish or
otherwise make available a
trust (or other qualified funding
arrangement) to accept the
transfer of the assets of the Flambeau
Plan from the Pentair. Inc.
Master Trust.
(c)Buyer shall indemnify and hold
harmless Seller and any
fiduciary with respect to the New Cross
Pointe Plan and the
Flambeau Plan from any liabilities and
claims (and reasonable
attorneys fees relating to the defense
thereof) made by any
person (including, but not limited to
the Pension Benefit Guaranty
Corporation) arising from any action or
omission with respect to
the new Cross Pointe Plan or the
Flambeau Plan occurring on or
after the Closing Date. Such liabilities
and claims include, but are
not limited to, those arising from any
termination of the New
Cross Pointe Plan or the Flambeau Plan.
(d) Seller shall indemnify and hold
harmless Buyer and any
fiduciary with respect to the New Cross
Pointe Plan or the
Flambeau Plan from any liabilities and
claims (and reasonable
attorneys fees relating to the defense
thereof) made by any
person (including, but not limited to,
the Pension Benefit
Guaranty Corporation arising from any
action or omission with
respect to the New Cross Pointe Plan or
the Flambeau Plan
occurring prior to the Closing Date.
The parties acknowledge that, as of
December 31, 1994, the
Flambeau Plan was underfunded (for
purposes of the additional
minimum liability under Paragraph 36 of
FAS 87 recordable on
Cross Pointe's books as of December 31,
1994) in the amount of
approximately $2,063,711. Cross Pointe
made in January 1995
its required quarterly contribution of
$174,520 to the plan. Seller
shall make all required quarterly
contributions for the 1995 plan
year with respect to such plan that are
due on or before the
Closing Date.
PENTAIR, INC.
By:Winslow H. Buxton
Its:Chief Executive Officer
By:David D. Harrison
Its:Chief Financial Officer
CROSS POINTE PAPER CORPORATION
BY:Ronald V. Kelly
Its:Chairman of the Board
NORANDA FOREST INC.
BY:T. G. Stinson
Its: Secretary and Vice President
EXHIBIT 99.1
NEWS RELEASE DATED FEBRUARY 21, 1995
PENTAIR TO SELL CROSS POINTE TO NORANDA FOREST FOR
$200 MILLION
Sales Follows Announced Plans to Sell or Restructure
Pentair's Paper Businesses and to Focus on Expansion
of Faster-Growing Industrial Businesses
ST. PAUL, MINNESOTA -- February 21, 1995 -- Pentair,
Inc. (NASDAQ/NMS:PNTA) today announced it has signed a
definitive agreement to sell its Cross Pointe Paper
Corporation to Noranda Forest, Inc., Toronto, Canada,
for approximately $200 million. Although the
transaction is subject to Noranda Forest's due
diligence investigations and government approval, it
is expected to close in early April, 1995.
"Our decision to sell Cross Pointe is consistent with
plans we announced in September 1994 to focus on the
expansion and growth of our industrial businesses,"
said Winslow H. Buxton, Pentair chairman and Chief
Executive Officer. "As we move toward completion of
the Cross Pointe sale, we continue to explore
alternatives for our Niagara of Wisconsin Paper
Corporation and our 50 percent share of the Lake
Superior Paper Industries joint venture."
Buxton added: "This is a significant step toward
focusing management attention and resources on the
expansion of our industry-leading industrial
businesses which, with additional acquisitions, will
make Pentair a much stronger, more manageable and
understandable company. We will also be better
positioned to achieve with greater consistency the
growth goals our shareholders expect."
Pentair's industrial products businesses represent
$1,261.7 million, or 77%, of the company's 1994 sales
and $125.5 million, or 90%, of 1994 operating income.
These companies' sales have grown at an average annual
rate of 23% over the last decade, while their combined
operating income growth has averaged 27% annually over
the same period.
Cross Pointe Paper Corporation is a leading
manufacturer of premium uncoated text and cover and
commercial printing and writing papers, including a
wide range of recycled and chlorine-free papers. The
company was formed in 1989 from the consolidation of
Pentair's Flambeau Paper and Miami Paper, to which
Dayton Paper was recently added. Cross Pointe, which
employs about 1,200 people at facilities in Minnesota,
Wisconsin, Illinois and Ohio, reported net sales of
$237 million in 1994.
"Cross Pointe is a strong business that has performed
well for Pentair," Buxton said. "We believe the
company will continue to grow and prosper under the
ownership of Noranda Forest, an experienced paper
company with broad resources. Furthermore, Noranda
Forest is both willing and able to uphold Pentair's
commitments to Cross Pointe employees, suppliers and
communities,"
Pentair is a St. Paul, Minnesota-based company with
1994 sales of $1.6 billion. The company comprises
10,000 employees in 11 domestic and international
businesses. Products manufactured by Pentair
businesses include electrical and electronics
enclosures; woodworking equipment; power tools;
sporting ammunition; automotive service equipment;
industrial lubrication systems and material dispensing
equipment; pumps; and paper.
EXHIBIT 99.2
NEWS RELEASE DATED APRIL 3, 1995
PENTAIR COMPLETES SALE OF CROSS POINTE
ST. PAUL, MINNESOTA -- April 3, 1995 -- Pentair, Inc.
(NASDAQ/NMS:PNTA) today announced it has completed the
sale of its Cross Pointe Paper Corporation to Noranda
Forest, Inc., Toronto, Canada, for approximately $200
million. The transaction was effective April 1, 1995.
Cross Pointe Paper Corporation is a leading
manufacturer of premium uncoated text and cover, and
commercial printing and writing papers, including a
wide range of recycled and chlorine-free papers. The
company was formed by Pentair in 1989 from the
consolidation of Flambeau Paper and Miami Paper;
Dayton Paper was recently added. Cross Pointe, which
employs about 1,200 people at facilities in Minnesota,
Wisconsin, Illinois and Ohio, reported net sales of
$237 million in 1994.
Pentair is a St. Paul, Minnesota-based company with
1994 sales of $1.6 billion. Pentair's 10 remaining
domestic and international businesses employ
approximately 9,700 people. Products manufactured by
Pentair businesses include electrical and electronics
enclosures; woodworking equipment; power tools;
sporting ammunition; automotive service equipment;
industrial lubrication systems and material dispensing
equipment; pumps; and publication papers.
